Arabic version: بنك إنجلترا يثبت الفائدة مع استمرار مخاطر الحرب في إيران

According to BBC News, the Bank of England has held interest rates at 3.75% for a fifth consecutive meeting, while saying it is ready to raise them if the war involving Iran escalates and keeps energy prices high. Three of the nine members of the rate-setting committee voted for an increase, one more than at the previous meeting.

Governor Andrew Bailey said the outlook for UK rates depended on whether the US-led war against Iran continued. He said that if the conflict persisted and oil prices remained above $100 a barrel, “the odds are that interest rates will have to go up higher”. But he said a ceasefire and memorandum of understanding that held would make a difference, stressing that events in the Middle East were highly unpredictable.

The Bank expects inflation to rise again this year because of high and volatile oil and gas prices, although its expected peak is slightly lower than previously forecast. Inflation eased to 2.6% in the year to June, following falls in diesel and petrol prices during a brief lull in hostilities. In a scenario where oil reaches $100 a barrel, the Bank projects inflation could reach 3.2% in 2026; with oil around $76 before falling to $71, it could reach 3%.

Both projections remain above the Bank’s 2% target. The Bank now expects the UK economy to grow by 1.1% this year, ahead of its April forecast. Bailey said the Bank’s task was to ensure any rise in inflation was temporary and that it returned to target. He also told reporters the Bank was not currently moving towards a rate rise.

Oil and gas prices have swung sharply as the conflict’s status changes. Crude fell on Monday after US President Donald Trump said there were “very friendly negotiations” between Washington and Tehran, before rising above $91 a barrel on Wednesday. The Bank said its assessment could shift day to day, with a lasting ceasefire potentially allowing energy prices to fall rapidly and raising the prospect of a rate cut.