BOE Holds Rates Amid Rising Energy Costs and Inflation Bets

The Bank of England is expected to keep interest rates unchanged this week, despite rising energy prices and inflation. The Monetary Policy Committee (MPC) will meet on Thursday to decide on whether to raise the base rate, which currently stands at 3.75%. Economists predict that the MPC will opt for a 'wait-and-see' approach, holding off on further rate hikes for now.

However, experts warn that future increases may be necessary if energy prices continue to surge. The Ofgem price cap is set to rise by 4% in October, and analysts anticipate an additional 9% hike in January. This could lead to higher inflation, which currently stands at 2.9%, up from 2.6% in June.

Matt Swannell, chief economic adviser to the Item Club, notes that it's a 'near certainty' that the MPC will leave rates unchanged. He also expects divisions among rate-setters to persist, with some favoring an immediate rate increase.