Policymakers keep borrowing costs unchanged as the Iran war fuels a fresh energy shock, while weakness in the UK jobs market adds to the policy dilemma
The Bank of England has kept its benchmark interest rate unchanged at 3.75 per cent, as policymakers balance renewed inflationary pressures against signs of weakening in the UK labour market.
The Bank’s Monetary Policy Committee (MPC) voted to leave the key rate unchanged at its latest meeting, in line with financial market expectations.
The decision comes against a volatile global backdrop, with the Iran war pushing up energy costs and raising concerns about another squeeze on household finances. Higher energy prices risk feeding into broader inflation at a time when the UK economy is already facing pressure.
Policymakers are also contending with signs of strain in the domestic jobs market. A weaker labour market complicates the Bank’s task as it seeks to prevent inflation from becoming entrenched without placing additional pressure on economic activity and employment.
This is a developing story
