BoE Holds Rates Amid US-Iran Conflict Fears

The Bank of England's Monetary Policy Committee (MPC) has maintained its key interest rate at 3.75%, but the decision was not unanimous.

In a closely watched vote, three members - Catherine Mann, Megan Greene, and Chief Economist Huw Pill - dissented, arguing that the ongoing US-Iran conflict increases the risk of second-round inflation.

Their concern is that higher energy costs could feed into wages and everyday pricing, pushing inflation above the 2% target. However, the MPC's majority view was that growth remains soft, and they do not expect a significant impact on inflation from the conflict.

The Bank of England still projects inflation to climb to 3.2% later this year from 2.6% in June, staying above the 2% target until early 2028, assuming energy prices follow market forecasts.