BOE Holds Rates Steady Amid War Uncertainty

The Bank of England (BOE) has kept interest rates steady at 3.75% in a 6-3 vote, as officials sought to balance the threat from resurgent US-Iran tensions against signs that domestic price pressures are easing more quickly than predicted.

The Monetary Policy Committee voted six-three in favour of leaving rates unchanged, with chief economist Huw Pill and external members Megan Greene and Catherine Mann voting for a quarter-point increase. The unpredictable environment meant that oil and gas prices were already running substantially higher than the average the bank had assumed in its central forecast just ten days before.

However, the committee said there were 'clear signs' that domestic inflationary pressures are easing and 'little evidence' so far that the energy shock has stoked wage demands and higher prices elsewhere. The majority of policymakers who backed no change in rates also said their strategy could change were the war to end soon.