BoE Holds Fire on Interest Rate Hike Amid Energy Price Pressures

The Bank of England (BoE) held its benchmark interest rate at 3.75 percent on Thursday, despite surging global energy prices pushing up inflation in Britain.

According to the BoE, global energy prices had risen significantly since the July Monetary Policy Report and remained volatile. Spot prices of Brent crude and British wholesale gas had risen by 36 percent and 78 percent, respectively, since the period leading up to the July Report.

The bank's decision came after data released by the Office for National Statistics showed that Britain's consumer price index (CPI) rose 3.1 percent year-on-year in August, up from 2.9 percent in July.

Andrew Bailey, governor of the BoE, said that higher global energy costs had 'a limited effect' on price and wage-setting in Britain so far, but warned that the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise bank rate to ensure that inflation falls back to our 2 percent target.