Bank of England Holds Steady Amid Middle East Tensions

The Bank of England is expected to keep interest rates unchanged this Thursday as tension mounts over a possible escalation in the conflict involving Israel and Iran, which might eventually draw in the United States. This situation could lead to soaring oil prices and drive UK inflation higher.

The bank's Monetary Policy Committee, consisting of nine members, will likely maintain the main interest rate at 4.25%, a two-year low, as they closely monitor Middle East developments in the upcoming days. The current UK inflation rate stands at 3.4%, surpassing the target of 2% and affected by the surge in oil prices now exceeding USD 75 a barrel.

According to Investec economist Sandra Horsfield, the risk to energy prices has heightened, placing it prominently on the agenda due to Middle Eastern developments. Additionally, the uncertainty surrounding tariffs imposed by U.S. President Donald Trump further clouds the global economic outlook, despite the U.K. potentially avoiding direct impact from such tariffs.

(With inputs from agencies.)