BOE Holds Fire as Inflation Rises Above Target

The Bank of England is expected to maintain its interest rate at 3.75% on Thursday, despite inflation rising above 2%. Markets predict a more than 80% chance that rates will remain steady, according to LSEG data.

This decision would put the central bank at odds with several major banks, including the US Federal Reserve and the European Central Bank, which have recently raised interest rates. The UK's inflation rate rose to 3.1% in August, driven by a 23% surge in motor fuel costs.

The Bank of England has not adjusted its policy since December, when it cut rates by 25 basis points. The Office for National Statistics attributed the spike in inflation to Britain's vulnerability as a net energy importer and the ongoing cost-of-living crisis.