BOE Holds Rates Steady but Tees Up Hike as Inflation Looms

The Bank of England kept interest rates steady on Thursday but hinted that it may raise them soon to combat inflationary pressures caused by the fallout from the Iran war.

Although six members of the Monetary Policy Committee voted to keep rates unchanged, three others backed a quarter-point increase to 4%.

Financial markets think it's more likely than not that the bank will back an interest rate hike at one of its next two policy meetings in November or December.

Bank Governor Andrew Bailey said that so far, higher global energy costs have had a limited effect on price and wage setting in the U.K. But he warned that the longer this volatility persists, the bigger the impact it will have on inflation, making it more likely that interest rates need to be raised to ensure inflation falls back to 2%.