Bank of England holds interest rates at 3.75% as inflation fears mount
📰 source: theguardian_business · 💼 business
the bank of england held its base rate at 3.75%, with the mpc voting 6-3 to keep borrowing costs unchanged. three members — mann, greene, and pill — voted to raise rates to 4% immediately. the bank warned that a further escalation in the iran war could drive uk inflation above 4% next year, with an adverse scenario pushing it to 4.5% by mid-2027 if oil stays above $100 a barrel.
brent crude briefly topped $100 last week but was trading above $90 on thursday. the bank's central forecast assumes oil falls to about $71 and expects inflation to peak at 3.2% later this year. uk inflation dropped to 2.6% in june, faster than expected, but the middle east conflict is keeping energy prices high and volatile.
meanwhile, the us federal reserve held borrowing costs unchanged on wednesday, with chair warsh unnerving some investors over its readiness to tackle inflation. us borrowing costs rose to their highest since 2007 amid concern the fed won't contain the energy price shock.
why it matters: bank of england holds rates as iran war risks pushing uk inflation above target, signaling prolonged cost of living pressures.
source: theguardian_business
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