Bank of England Holds Rates but Warns of Potential Future Hikes Due to Inflation Risks

Sun, 03 May 2026 11:19:00 +0200

The Bank of England has kept its interest rates steady at the current level but issued a significant warning about possible future rate hikes amid heightened economic uncertainties. According to the central bank's scenarios, inflation could climb as high as 6.2% next year if a prolonged energy shock occurs, such as oil prices staying above $130 per barrel due to geopolitical tensions like the conflict in the Middle East. The Monetary Policy Committee voted 8-1 to hold rates, with one member favoring an immediate increase. This comes after several rate cuts last year, as officials now anticipate inflation pressures to build rather than ease toward the 2% target. The warnings highlight risks from global energy costs and their impact on the UK economy, including potential effects on mortgages for millions of households. Markets are now pricing in nearly three quarter-point rate increases by the end of the year. The Bank's analysis underscores the fragility of the post-cut recovery and the