BoE Freezes Interest Rate Amid Ongoing US-Iran Conflict Inflation Concerns

The Bank of England (BoE) maintained its benchmark interest rate at 3.75% on Thursday, despite warning that UK inflation is set to rise again due to elevated energy prices caused by the US-Iran conflict.

In a widely expected decision, the BoE's Monetary Policy Committee (MPC) opted against raising the interest rate for a fifth consecutive time, with Governor Andrew Bailey saying that 'inflation has fallen faster than we'd expected, but the conflict in the Middle East continues to mean high and volatile energy prices.'

The BoE forecasted UK inflation to peak at 3.2% by the end of the year, before easing slightly, with a more pessimistic scenario predicting it could jump as high as 4.5% in 2027.

Financial analyst Richard Carter noted that 'we are once again in a period of higher interest rates, relative to recent history, for a longer period of time than expected.'