BoE Holds Rate, Warns of Hike Amid Middle East Conflict

The Bank of England (BoE) held its benchmark interest rate at 3.75 percent on Thursday, defying expectations that it would raise rates in response to surging inflation and energy prices.

However, BoE governor Andrew Bailey warned that a hike might be needed if the conflict in the Middle East persists, as higher energy costs push up inflation and put upward pressure on wages.

The decision comes after the Federal Reserve lifted US interest rates for the first time since 2023 to combat surging inflation. The European Central Bank also raised interest rates last week.

Three members of the BoE's monetary policy committee voted to increase the UK rate by 0.25 percentage points, but were outvoted by the five remaining members, who preferred no change for a sixth time in a row.