BoE Keeps Rates Steady, Warns of Potential Rate Hikes Amid Iran Conflict

The Bank of England (BoE) has kept interest rates at 3.75%, but warned that they may need to rise if the Iran conflict continues, citing inflation risks.

In a surprise move, the BoE also paused its sales of government bonds for six months and announced a new plan to unwind its stock of British government bonds by 2034.

The central bank's Monetary Policy Committee voted 6-3 to keep rates at 3.75%, in line with expectations, but signaled that they could back a rate rise if needed.

BoE Governor Andrew Bailey said the key question of whether the energy price surge causes broader inflation pressures remains unanswered, but warned that the longer the conflict continues, 'the more difficult this becomes'.