BoE Eyes Rate Stability Amid Energy Price Shock

The Bank of England is expected to keep interest rates on hold at 3.75 per cent for now, despite surging energy prices driven by the Iran war.

Most economists polled by Reuters last week predicted that the BoE would leave its Bank Rate unchanged for the rest of the year, with only three of nine Monetary Policy Committee members seen voting for a hike this week.

Financial markets point to an 80 per cent chance of a quarter-point rate hike in November, but economists are less convinced, with around one in eight respondents expecting a November increase.

The recent jump in energy prices has shifted opinion towards a possible hike, following moves by the European Central Bank and the US Federal Reserve, which raised borrowing costs on Wednesday due to stubborn inflation pressure driven in part by rising energy costs.