BOE Keeps Interest Rates Unchanged Amid Global Policy Divergence

The Bank of England kept interest rates unchanged at 3.75% despite rising UK inflation and pressure from global monetary policy divergence.

The decision came against a backdrop of higher energy prices, driven by the ongoing Middle East conflict, which could push inflation higher and force the Bank to raise borrowing costs again.

Andrew Bailey, the Bank's governor, warned that the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our 2% target.

The Bank also announced an unexpected plan to sell £146 billion of UK government bonds directly to the Treasury, which could ease some pressure on the gilt market.