BoE Maintains Rates at 3.75% Amid Ongoing Middle East Conflict

The Bank of England's Monetary Policy Committee (MPC) voted to maintain interest rates at 3.75% on Thursday, following a 6-3 vote.

According to Governor Andrew Bailey, 'financial conditions will continue to work to push down on inflation, and holding Bank Rate is appropriate at this meeting.' However, he noted that if the conflict in the Middle East persists, policy may have to tighten.

Deputy Governor Clare Lombardelli emphasized the uncertainty surrounding energy prices and suggested that raising Bank Rate would be a prudent move if the conflict continues without resolution.

External MPC member Swati Dhingra expressed caution, stating that 'Bank Rate remains materially higher than in peer European economies, financial conditions have tightened rapidly since the conflict began, and domestic demand remains subdued.' She believes it is wise to wait for a clearer read on the shock's durability before making any decisions.