BoE Holds Interest Rates as Energy Market Risks Mount

The Bank of England has decided to keep interest rates on hold at a sixth consecutive meeting, despite rising inflation concerns. The central bank's Monetary Policy Committee voted six to three to leave rates unchanged, with officials warning that they may need to rise in the future if energy markets continue to be threatened by the Iran war.

The decision came as the Bank of England also announced plans to overhaul its bond disposal programme, known as quantitative tightening. Under new rules, the Bank will pause all sales of longer-dated debt and instead sell £20bn of shorter-term debt each year. The Bank will also keep hold of all its longest-dated gilts until they mature.

Andrew Bailey, governor of the Bank of England, said that there had been a 'material increase' in energy prices since July, which has affected the near-term inflation outlook. He warned that if the conflict in the Middle East persists and second-round effects emerge, policy may need to tighten.

Critics argue that the Bank is being too cautious, with Susannah Streeter of Wealth Club saying that a rate hike in November is now 'a distinct possibility'. Nigel Green of Devere called the decision 'feet-dragging' and said it would have a cost for the economy.