\n<\/p>\n
The Bank of England has kept interest rates unchanged for the fifth meeting in a row but has indicated it could raise them if the Iran war escalates.<\/b><\/p>\n
It expects inflation – the rate at which prices rise – to pick up due to volatile oil and gas prices caused by the Middle East conflict, although the peak will be slightly lower than previously thought.<\/p>\n
The Bank voted to hold interest rates at 3.75% at its latest meeting. <\/p>\n
Bank of England governor Andrew Bailey warned the future of UK interest rates depended on whether the US led war against Iran continues.<\/p>\n
While major uncertainties remain because of the war, the Bank predicts the UK economy will grow this year by more than previously forecast.<\/p>\n
Bailey told the BBC: “If we get a continuation of this conflict going on and oil prices stay above $100 a barrel… the odds are that interest rates will have to go up higher.”<\/p>\n
But he also said if a ceasefire, and memorandum of understanding, is established and sticks that would make a difference.<\/p>\n
“So it depends on how the events in the Middle East, frankly, unfold. And sadly, we all know this is highly unpredictable,” Bailey said.<\/p>\n
“What goes on in the Gulf is not, I’m afraid, under our control.”<\/p>\n
Three members of the Bank’s nine-member rate-setting committee voted for a hike, one more than the previous meeting – with that member explicitly citing the collapse of the US-Iran memorandum of understanding for their vote to raise rates.<\/p>\n
However, speaking at an earlier news conference, Bailey said the Bank was not currently moving towards raising interest rates.<\/p>\n
“Please do not leave this room thinking that the Bank of England is edging towards a hike, because frankly, there’s nothing in what I said, and I think any of us have said along those lines,” he told reporters.<\/p>\n
If the Iran war continues and oil prices hover around $100 a barrel, then a rate rise seems likely. But many in the markets expect tensions to subside in the coming weeks, ahead of crucial elections across the US in the autumn.<\/p>\n<\/div>\n