Bank holds interest rates but says it is ready to raise them if Iran war escalates
The Bank also expects the economy to grow more than previously forecast this year, although uncertainties remain because of the Iran war.
The Bank of England has maintained interest rates at 3.75% for the fifth consecutive meeting, but warned it could raise them if tensions in the Iran conflict escalate. The central bank's governor, Andrew Bailey, said the future of UK interest rates would depend on whether the US-led war against Iran persists. If a ceasefire and memorandum of understanding is established and adhered to, the bank believes this would mitigate the need for rate hikes.
However, the Bank has acknowledged the unpredictable nature of events in the Middle East. Inflation is expected to rise due to volatile oil and gas prices from the conflict, though slightly lower than initially anticipated. The UK economy is projected to grow by more than forecast this year. Three members of the nine-member rate-setting committee voted for a hike, with one member citing the collapse of the US-Iran memorandum of understanding.
Bank officials emphasized that they are not moving towards raising interest rates yet, despite potential risks.
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