BoE Holds Interest Rates Amid Middle East Tensions

The Bank of England is expected to hold interest rates steady next week despite intensifying tensions in the Middle East. Economists predict a majority of the rate-setting committee will keep the base interest rate at 3.75%, echoing previous predictions that had largely assumed stability for the rest of the year.

The latest inflation data shows UK consumer price index easing back to a 15-month low in June, at 2.6%. However, forecasts suggest inflation will rise back to 3.25% later this year due to higher energy costs and household bills.

Renewed hostilities between US-Israeli and Iranian forces have increased uncertainty over the outlook, with oil prices surging above $100 per barrel for the first time since May. This has led some economists to suggest a September rate hike could be on the table if oil prices remain high.