The Bank of England has held its base interest rate at 3.75% amid concern that renewed conflict involving Iran could push up energy costs and reignite inflation. The decision matters because higher inflation could prolong pressure on household budgets and delay any reduction in borrowing costs, though governor Andrew Bailey said the Bank was not moving towards an immediate rate rise.

The Monetary Policy Committee voted six to three to keep rates unchanged, while three members favoured raising them to 4%. UK inflation fell to 2.6% in June, but the Bank warned that a prolonged conflict and oil above $100 a barrel could lift inflation to 4.5% by mid-2027; markets expect rates to rise to 4% before year-end.