BoE Holds Interest Rates as Inflation Reaches Five-Month High

The Bank of England has maintained its main interest rate at 3.75% despite rising inflation in the UK, which reached a five-month high due to the ongoing impact of the Iran war on fuel prices.

Economists expect UK inflation to rise further, potentially exceeding the central bank's target of 2%, as households face another increase in domestic energy bills starting in October.

While some economists predict interest rates will be raised at one of the next two meetings, either in November or December, David Rees from Schroders believes the economic backdrop remains relatively soft, limiting the impact of imported price pressures on domestic wages and prices.