BoE Holds Rates as Iran War Clouds UK Outlook, Signals Possible Future Moves

The Bank of England is expected to keep interest rates unchanged this week after pausing in March to assess the economic fallout from the Iran war. Policymakers have faced rising uncertainty as energy costs climb and inflation risks persist. A Reuters poll suggests an 8-1 vote to hold rates at 3.75%, though some officials may push for a rise to 4.0% to curb price pressures and prevent higher wage demands. Investors still anticipate rate hikes later this year, with increases priced in for July and September. Governor Andrew Bailey has warned against premature tightening, while Chief Economist Huw Pill questioned a “wait and see” stance. The central bank will also release updated forecasts, likely showing higher inflation and weaker growth ahead.