BOE Keeps Key Rate Unchanged Amid Iran Tensions and Rising Oil Prices

The Bank of England kept its key interest rate at 3.75% for the fifth time this year, following a bigger-than-expected drop in inflation to 2.6% last month.

The decision was made after a split vote by policymakers, with six members voting to keep the rate unchanged and three calling for an increase of a quarter point to 4%.

Committee member Huw Pill expressed concerns about potential 'second-round effects' driven by wage and price setting, which could lead to greater intrinsic inflation persistence.

The move comes as the bank assesses the fallout from renewed fighting in Iran, which has sent oil prices soaring due to concerns about the continued disruption of traffic in the Strait of Hormuz.