Bonds & Rates
Home›Bonds & Rates›Central Banks›Bank of England holds rates, warns it may tighten if I…
Bank of England holds rates, warns it may tighten if Iran war escalates
The BoE kept the policy rate at 3.75%, and governor Andrew Bailey tied any future move to how long an energy shock lasts and its impact on inflation.
The Bank of England held interest rates unchanged at 3.75% for a fifth straight meeting, while indicating it could raise borrowing costs if the Iran conflict escalates further, BBC Business reports.
In its outlook, the BoE expects inflation to pick up due to volatile oil and gas prices linked to the Middle East conflict, though it now sees the eventual inflation peak as slightly lower than previously forecast. The bank said the severity and duration of the energy shock would determine whether policy needs to tighten.
Bank governor Andrew Bailey said the BoE is not currently moving toward a hike, but he added that if the conflict persists for an extended period, the bank is likely to tighten policy to counter inflationary pressures in the UK economy.
The article notes markets are watching oil and gas price swings tied to developments around the conflict, including recent moves in crude prices following comments by US President Donald Trump. It also points to expectations that tensions could ease ahead of upcoming elections in the US, while the BoE highlights that inflation has fallen faster than expected but remains exposed to renewed energy price volatility.
Latest closeWTI crude $84.41 ▲6.5%