Middle East Tensions Won't Spur Interest Rate Hike

Oxford economists expect the Bank of England to hold interest rates steady at 3.75 per cent next week, despite fresh uncertainty in the Middle East.

The Monetary Policy Committee (MPC) is set to meet on Thursday, July 30, to decide on interest rates and unveil new economic forecasts.

The UK's inflation rate has eased in recent months, with the Office for National Statistics reporting a 15-month low of 2.6 per cent in June.

Economists from Oxford Economics and Nomura predict that a majority of the MPC will vote to maintain the current interest rate, despite concerns over the potential impact of Middle Eastern tensions on inflation.

Thomas Pugh, chief economist at RSM UK, believes oil prices will largely determine the path of interest rates for the next year. If they remain close to $100 per barrel over the summer, a September rate hike would become more likely, with another in the winter also possible.