BOE Keeps Rates Steady Amid Iran War Fears

The Bank of England kept its key interest rate at 3.75% for the fifth time this year, defying expectations that it would hike rates to combat rising inflation.

The decision was made after a bigger-than-expected drop in the inflation rate last month gave policymakers breathing space to assess the fallout from renewed fighting in Iran.

However, three policymakers disagreed with the decision, saying the potential inflationary effect of the recent surge in energy prices was too great to ignore. They voted to raise rates by a quarter point to 4%.

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