BoE Holds Rates But Signals Potential Hike Amid Iran War Inflation

The Bank of England maintained its interest rates at a steady pace on Thursday, but hinted that it could raise them soon to combat inflationary pressures resulting from the Iran war.

While six members of the Monetary Policy Committee voted to keep rates unchanged, three members supported a quarter-point increase to 4%. Financial markets now expect a rate hike in either November or December, as global energy costs continue to impact the UK economy.

Bank Governor Andrew Bailey noted that higher global energy costs have had a limited effect on price and wage setting in the UK so far, but warned that prolonged volatility would increase inflation's impact.

The Bank of England expects inflation to rise to around 4% in the first quarter of next year from the current 3.1%, with households facing another energy bill hike.