BoE Keeps Rates Steady as Middle East Conflict Raises Inflation Fears

The Bank of England maintained its policy rate at 3.75%, but signaled that it may need to tighten monetary policy if the conflict in the Middle East persists.

Bank Governor Andrew Bailey said that if the conflict continues, 'it is likely that policy may have to tighten' due to increased risk of second-round effects emerging.

The bank's Monetary Policy Committee voted 6-3 to keep the Bank Rate unchanged, in line with market expectations.

Annual consumer inflation rose to 3.1% in August and is expected to climb to around 3.75% in the fourth quarter of 2026 and slightly above 4% in early 2027 due to energy price increases.