UK Households Warned to Prepare for Interest Rate Rises

Households in the UK are being warned to prepare for interest rate rises after the Bank of England's decision to hold rates at 3.75%. The bank's monetary policy committee voted six to three to maintain its key base interest rate.

The Bank of England stressed that further escalation in the Iran war could drive inflation above 4% next year, adding to cost of living pressures on households.

Ed Monk, pensions and investment specialist at Fidelity International, warned: 'Households should brace for borrowing costs to rise in the months ahead.'

The bank itself warned that an 'adverse scenario' involving a prolonged war in Iran and oil prices remaining above $100 a barrel could drive UK inflation to a peak of 4.5% by the middle of 2027.