Bank of England holds interest rates at 3.75% as inflation fears mount

Split vote comes as Iran war is rekindled and oil price climbs close to $90 a barrel Only Middle East crisis is preventing drop in UK interest rates The Bank of England has kept UK interest rates on hold as it warned that a further escalation in the Iran war could drive inflation above 4% next year, adding to cost of living pressures on households. Against a volatile backdrop in the Middle East conflict, the Bank’s monetary policy committee (MPC) voted by six to three to keep its key base rate at 3.75%. As Donald Trump’s renewed attacks on Iran drive up global energy prices, the Bank said an “adverse scenario” involving a drawn-out war and oil prices remaining above $100 a barrel could push UK inflation to a peak of 4.5% by the middle of 2027. However, on a day of fresh US strikes in the widening conflict, Andrew Bailey, the Bank’s governor, played down suggestions among City traders that Threadneedle Street was edging closer to raising rates. In a press conference after the decision, he said there was little sign that inflationary pressures were becoming entrenched because the growth outlook for the UK economy remained weak. “Please do not leave this room thinking that the Bank of