Bank of England expected to keep interest rates unchanged despite rising inflation

The Bank of England is anticipated to maintain interest rates at 3.75% for the sixth straight meeting on Thursday, despite the U.K.'s inflation reaching a five-month peak. This decision comes as the fallout from the Iran war drives up fuel prices. Inflation, measured by the consumer prices index, rose to 3.1% in August from 2.9% in July.

While economists expect a majority of the Monetary Policy Committee to demand more proof that higher inflation is translating into persistent price increases and wage gains, they still believe the economic backdrop, including wage levels and the labor market, remains relatively weak. This should limit the extent to which imported price pressures are embedded in domestic wages and prices.

The rise in energy costs, particularly gas and oil, is expected to continue into October, potentially prompting further rate hikes at the next meeting in November or December.