BoE Holds Rates at 3.75%, Hints at Future Increase Amid Rising Inflation

The Bank of England has kept its main interest rate at 3.75% despite higher inflation, but hinted that it may raise rates soon to control price pressures.

The decision was widely anticipated, with six members of the Monetary Policy Committee voting to keep rates unchanged while three backed a quarter-point increase to 4%. Borrowing rates were kept on hold, but financial markets think it's more likely than not that the bank will back an increase at one of its next two policy meetings.

According to Bank Governor Andrew Bailey, higher global energy costs have had a limited effect on price and wage setting in the UK so far, but this volatility will persist and impact inflation. Inflation is now expected to rise to around 4% in the first quarter of next year from its current 3.1%, taking it further above the bank's target rate of 2%.

The decision comes as other central banks, including the U.S. Federal Reserve, have started raising borrowing costs again. The Bank of England's rate-setters meet on November 5, and many economists believe that will be a natural moment for a change in course.