BOE Holds Rates at 3.75% Amid Ongoing Inflation Fears

The Bank of England's Monetary Policy Committee (MPC) voted to hold interest rates at 3.75% for the fifth consecutive meeting on Thursday, despite a split vote among policymakers.

The decision was made with three members - Catherine Mann, Megan Greene, and Huw Pill - voting for a 0.25 percentage point increase to 4%, while six others believed the current rate was sufficient.

The Bank acknowledged that inflation has fallen faster than expected, but warned that renewed fighting between the US and Iran could cause energy prices to rise again, potentially pushing inflation above 3%.

The MPC projects that inflation will climb to around 3.2% in early 2027 before returning to target by year-end, but noted that an adverse scenario with oil prices rising to $100 per barrel could see inflation peak at 4.5%, triggering rate hikes.