Bank of England holds interest rates over Iran war shock

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The Bank of England has decided to keep its base borrowing rate at 3.75% due to economic turmoil caused by the war in Iran. Policymakers had been expected to make another cut before the conflict, but now traders are betting on two rises this year. These predictions were made in response to forecasts that inflation will climb to 3.5% by the end of 2026. It had been hoped that it would drop to the government’s target rate of 2% in spring. The Bank’s decision coincided with strikes on Qatari energy infrastructure, which briefly caused the price of oil to rise to $119 a barrel. This volatility will feed into the cost of fertilisers, chips and other goods. At least it brought harmony on Threadneedle Street. It was the first unanimous vote for more than four years.