Home›Bonds & Rates›Central Banks›Bank of England holds rates at 3.75% amid rising infla…

Bank of England holds rates at 3.75% amid rising inflation risk

The decision was supported by a fifth straight hold, with the BoE citing volatile oil and gas prices tied to the Iran war and warning inflation could exceed 3% in 2026 under higher oil scenarios.

Reported · Written up by our desk · Central Banks

The Bank of England kept UK interest rates at 3.75% for a fifth consecutive meeting, while warning that inflation pressures could return as energy prices stay volatile amid the Iran war, BBC Business reports.

According to the BoE, the path for borrowing costs depends on how long and how severe any energy shock proves to be. The bank said it has shifted marginally towards a later rate rise, with three of its nine-member rate-setting committee voting for a hike.

BBC Business added that the BoE expects price growth to pick up as volatile oil and gas prices influence inflation this year, though it revised the expected peak lower than before. In a worst case where oil reaches $100 a barrel, the BoE projects inflation could reach 3.2% in 2026, and in an alternative scenario with oil around $76 before falling to $71, inflation could reach 3.0%.

The BoE said the UK economy is expected to grow by 1.1% this year and emphasized that the outlook depends on the duration of Middle East tensions, with markets watching swings in crude prices as negotiations and renewed threats from Washington have added uncertainty, BBC Business reports.

Latest closeWTI crude $84.41 ▲6.5%

More like this

Sources