Bank of England keeps interest rates on hold at 3.75%
The Bank of England has kept interest rates on hold at 3.75pc for the sixth straight meeting.
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Despite rising inflation, the Bank of England has kept interest rates on hold at 3.75pc for the sixth straight meeting.
Inflation hit 3.1pc in August and economists say it will continue to rise as a result of the Iran war, which has pushed up the price of oil and gas.
Other major central banks around the world have increased rates to counteract higher prices.
Inflation has been above the Bank of England's 2% target for nearly two years.
The Bank of England said the majority of policymakers believed “holding bank rate, combined with the significant tightening of financial conditions that had occurred since the conflict started, was providing sufficient insurance against the upside risks to inflation stemming from fluctuations in energy prices”.
“This would allow time to observe further evidence, preserving the option to change bank rate in future were the evidence to warrant it,” the Bank added.
Governor Andrew Bailey, who voted for a hold, said: “So far higher global energy costs have had a limited effect on price and wage setting in the UK.
“But the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank rate to ensure that inflation falls back to our 2% target.”
Ahead of the Bank's announcement, mortgage rates hit a three-year high.
The average five-year fixed deal has risen to 5.87pc, according to Moneyfacts, which is its highest since November 2023.
Rates have risen after official figures on Wednesday showed inflation rose to 3.1pc in August.
It raises pressure on the Bank of England to increase interest rates from their current level of 3.75pc.
The typical two-year fixed mortgage rate has climbed to 5.83pc, its highest since May.