Emmanuel OchayiThe Bank of England announced its decision to keep the main interest rate at 5.25%, citing concerns related to the Israel-Hamas war’s impact on oil and gas prices.
While inflation is expected to decrease in the short term, the bank emphasized the need for time to reach the 2% target rate. The minutes revealed that three of the nine committee members supported a quarter-point increase to 5.5% to combat inflation.
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The ongoing conflict in the Middle East has raised uncertainty about energy prices. The bank’s previous forecast for inflation to return to the 2% target by early 2025 was revised to the final quarter of 2025.
Homeowners in the UK face higher borrowing costs due to the interest rate hikes, and economic challenges could affect the governing Conservative Party as a general election approaches. According to APnews, the opposition Labour Party has gained a lead in polls. Treasury chief Jeremy Hunt plans to deliver a budget statement aimed at boosting economic growth
In a statement from the Bank of England, Governor Andrew Bailey said: “We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed. But even if they are not, it is much too early to be thinking about rate cuts.”
The Bank of England’s decision to maintain high-interest rates reflects concerns about the Israel-Hamas war’s potential impact on oil and gas prices and its role in pushing up inflation, with a possible recession on the horizon.
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