BoE Keeps Rate at 3.75% Amid Iran War Concerns

The Bank of England kept its key interest rate at 3.75 per cent for the fifth time this year, after a bigger-than-expected drop in inflation gave policymakers 'breathing space' to assess the fallout from renewed fighting in Iran.

In line with economists' expectations, the Bank's Monetary Policy Committee voted 6-3 to keep the rate at 3.75 per cent, with three members voting to raise it by a quarter point to 4 per cent.

The split decision highlights growing tensions within central banks about how to respond to stubbornly high inflation and concerns that the war in Iran will lead to another round of price increases.

Consumer price inflation in the UK slowed to 2.6 per cent in the 12 months through June, but remained above the bank's 2 per cent target for a 21st consecutive month.