Bank of England warns ‘higher inflation unavoidable’ after holding interest rates

Governor says decision to keep rates at 3.75% reasonable given unpredictability of events unfolding in Middle East

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The Bank of England has left interest rates unchanged at 3.75% but said the UK may need to brace for increases later this year, as “higher inflation is unavoidable” as a result of the war in the Middle East.

The Bank’s rate-setting monetary policy committee (MPC) voted to leave borrowing costs on hold, but said that if energy costs stayed persistently high it might have to take a more “forceful” response to keep inflation under control.