BoE Keeps Interest Rates Unchanged Amid Rising Inflation and Middle East Conflict Risk

The Bank of England (BoE) maintained its interest rate at 3.75% despite rising UK inflation and pressure from policymakers to raise borrowing costs.

The Monetary Policy Committee voted 6-3 to keep the BoE's base rate unchanged, while warning that a prolonged conflict in the Middle East could push inflation higher and force another rate increase.

British households are already dealing with the effects of post-Covid inflation surge and energy shock associated with Russia's invasion of Ukraine.

The BoE highlighted the risk that continued fighting in the Middle East could transmit higher energy prices into household costs, wages, and broader inflation, and warned that UK inflation could reach 4% by early next year as higher energy costs feed through to households.