BoE Holds Rates as Energy Prices Fuel Inflation Fears

The Bank of England's Monetary Policy Committee (MPC) voted to keep interest rates unchanged at 3.75% on Thursday, despite rising UK inflation and surging energy prices.

The decision came against a backdrop of divergent global monetary policy, with the Federal Reserve and European Central Bank raising rates, while the Bank of Japan is expected to increase its key rate soon.

Andrew Bailey, the Bank's governor, warned that continued fighting in the Middle East could transmit higher energy prices into household costs, wages, and broader inflation.

The Bank highlighted the risk that prolonged conflict could push inflation higher and force it to raise borrowing costs again. It warned that inflation could reach 4% by early next year if energy costs feed through to households.