UK central bank keeps borrowing costs steady despite energy-driven inflation concerns and a 6-3 split vote.
The Bank of England maintained its benchmark interest rate at 3.75% in July, reflecting a 6-3 vote by the Monetary Policy Committee. Three members favored a 0.25 percentage point hike to 4%, citing persistent inflation risks tied to volatile energy prices amid Middle East tensions.
Annual CPI inflation fell to 2.6% in recent data, but the BoE expects it to rise later this year as higher energy costs feed through. While underlying disinflation signs remain, the committee warned of upside risks if elevated energy prices trigger second-round wage and price effects.
The decision underscores the BoE’s focus on balancing inflation control with economic adjustment, as loose labor markets and higher borrowing costs weigh on demand.