"Prior to US strikes Iran, it was widely expected that the BoE would continue its path of cutting rates, with inflation coming down and the economy in need of stimulation - but the Monetary Policy Committee has warned that inflation will rise as a result of the new shock to the economy, which has forced up global gas and oil prices."
"The rising cost of energy has been dubbed Trump-flation by some, on account of it being a direct consequence of the US president's decision to launch large-scale attacks on Iran, which has led to wider-spread war across the Middle East. Interest rates staying higher means that mortgages will remain more costly than had been hoped for."
The Bank of England's Monetary Policy Committee unanimously voted to keep interest rates at 3.75%, pausing the anticipated rate-cutting cycle. This decision reflects concerns that geopolitical tensions in the Middle East, particularly US military strikes on Iran, will drive up global energy prices and increase inflation. Previously, the committee expected to continue lowering rates as inflation declined and economic stimulus was needed. However, the new economic shock from rising oil and gas costs has altered this trajectory. The decision means mortgage costs will remain elevated, with lenders already raising rates in anticipation of the vote outcome.
Read at www.independent.co.uk
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