Economic Buzz: Bank of England keeps interest rates unchanged, warns about rising inflation

The Bank of England has kept UK interest rates unchanged today but warned that a further escalation in the Iran war could drive inflation above 4% next year. Bank?s monetary policy committee (MPC) voted by six to three to keep its key base rate at the current level of 3.75%. The central bank has indicated a willingness to increase borrowing costs if necessary. Andrew Bailey, the Bank?s governor, stated that inflation has fallen faster than we?d expected, but the conflict in the Middle East continues to mean high and volatile energy prices. That will cause inflation to rise again later this year.

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