LONDON — The Bank of England is expected to leave interest rates unchanged on Thursday, as growing concerns over a potential escalation in the Israel-Iran conflict — and possible U.S. involvement — raise fears of a surge in oil prices that could further fuel inflation in the U.K.
The central bank’s nine-member Monetary Policy Committee is widely predicted to hold the benchmark rate at 4.25%, a two-year low, as officials monitor developments in the Middle East in the coming days.
With inflation currently at 3.4%, well above the 2% target, policymakers are likely to be cautious amid a recent spike in oil prices, which have climbed above $75 a barrel.
The Bank had previously forecast that inflation would remain high in the short term before easing next year. However, rising energy costs now threaten to derail that outlook.
