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U.S.Reported

Only the Middle East crisis is preventing a drop in UK interest rates

Bank’s wariness about inflationary pressures from the conflict lie behind decision to hold steady at 3.75% There is a threat of high inflation coming to the UK but only from the conflict in the Middle East, which could keep oil prices high for much longer than was expected when Donald Trump first began attacking Iran. It is the war that makes the difference between a benign outlook for inflation and one that puts it back on a rising trajectory, senior UK central bankers believe. The Bank of England’s monetary policy committee was clear in its decision on Thursday to hold interest rates at 3.75% that underlying pressures on inflation are almost entirely absent in the domestic economy. Prices are stable and, without the war, would be rising steadily at the central bank’s 2% target.

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Scoop News DeskMiddle East · Published Thursday, July 30, 2026 at 12:44 PM UTCUpdated Thursday, July 30, 2026 at 5:24 PM UTC

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Threadneedle Street officials are worried that retail prices will ratchet up if companies spot a way to increase them, taking advantage of a general expectation among consumers that the war has raised the costs of production. The Bank’s warning that it might need to raise rates if the war continues means the impact on businesses, consumers and mortgage borrowers could, unless Trump pulls back, be much more severe.

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Version 2updated
Thursday, July 30, 2026 at 1:17 PM UTC
Bank’s wariness about inflationary pressures from the conflict lie behind decision to hold steady at 3.75% There is a threat of high inflation coming to the UK but only from the conflict in the Middle East, which could keep oil prices high for much longer than was expected when Donald Trump first began attacking Iran. It is the war that makes the difference between a benign outlook for inflation and one that puts it back on a rising trajectory, senior UK central bankers believe. The Bank of England’s monetary policy committee was clear in its decision on Thursday to hold interest rates at 3.75% that underlying pressures on inflation are almost entirely absent in the domestic economy. Prices are stable and, without the war, would be rising steadily at the central bank’s 2% target.
Version 3unpublished
Thursday, July 30, 2026 at 5:24 PM UTC
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