BoE Warns Higher Inflation Looming Amid US-Iran Conflict

The Bank of England has held its benchmark interest rate at 3.75 percent, but warned that higher inflation is on the horizon due to the ongoing US-Iran conflict and its impact on energy prices.

Bank of England governor Andrew Bailey stated that while inflation has fallen faster than expected, high and volatile energy prices caused by the conflict will lead to a rise in inflation later this year.

The committee, however, voted unanimously to maintain the current rate, with three members voting for a 0.25 percentage point increase to four percent.

The central bank's forecast projects inflation to peak at 3.2 percent by the end of the year before easing slightly, but warned that there remains scope for the outlook to change materially as events in the Middle East unfold.