BOE Keeps Rates Steady Despite Oil Price Surge

The Bank of England is expected to keep interest rates unchanged at 3.75% on Thursday, despite a recent spike in oil prices above $100 a barrel.

According to Reuters, British inflation has come in below the BoE's forecasts, dropping to a 15-month low of 2.6% in June.

The U.S.-Iran conflict has led to an increase in oil prices, but the lag in how regulated domestic energy prices respond to higher wholesale costs means Britain now has lower inflation than the United States and the euro zone.

Economists polled by Reuters do not see any real chance of a rate rise by the BoE this week, but there is a sharp split on the longer-term outlook. Some expect a quarter-point BoE rate rise in September or next June, while others believe a hike this year is unlikely.