BoE Holds Rates as Middle East Conflict Drives Oil Prices Higher

The Bank of England is expected to hold interest rates steady next week amidst growing concerns over inflation due to the intensifying Middle East conflict.

Economists predict a majority of the Bank's rate-setting committee will keep the base interest rate at 3.75%, despite recent attacks in the region and US threats driving up oil prices.

The Office for National Statistics reported that UK consumer price index inflation eased back to a 15-month low in June, at 2.6%. However, economists expect inflation to rise again later this year as higher energy costs feed into household bills from July.

Oil prices surged above $100 per barrel on Thursday for the first time since May, amid concerns over supply disruption in the region. Thomas Pugh, chief economist at RSM UK, believes oil prices will largely steer the path of interest rates for the next year.