Bank of England Expected to Maintain Interest Rate at 3.75% Amid Inflationary Pressures from Middle East Conflict

Apr 24, 2026, 12:30

Introduction

The Bank of England''s Monetary Policy Committee is scheduled to vote on the base interest rate on April 30, with economists widely anticipating a decision to hold the rate at 3.75% despite rising inflation linked to the ongoing conflict in the Middle East.

Main Body

The nine-member committee will also release its first full monetary policy report and economic forecasts since the conflict between US-Israeli and Iranian forces began in late February. Recent economic data shows that the conflict has contributed to higher inflation. The Office for National Statistics reported that UK CPI inflation rose to 3.3% in March, a three-month high. This was driven by a sharp increase in motor fuel prices, which went up 8.7% month-on-month, the largest such rise since June 2022. Furthermore, Bank of England research indicates that UK firms expect food inflation could reach 7% next year. Despite these inflationary signals, other data show the UK economy grew by 0.5% in February, exceeding forecasts of 0.1%, and retail sales volumes were stronger than expected, partly due to motorists stockpiling fuel. Economists from several institutions have offered their assessments. Andrew Goodwin of Oxford Economics stated that the MPC is likely to keep the rate unchanged at 3.75%, as most members prefer to maintain a restrictive policy while gathering more information on how the energy shock affects the economy. He noted that a minority might vote for a 25-basis-point increase as a pre-emptive measure against the risk of higher inflation. Thomas Pugh of RSM UK described the outcome as ''nailed on,'' predicting a unanimous 9-0 vote to hold. He cited significant uncertainty about the Iran conflict''s impact on energy prices and the economy. However, he cautioned that the resilience of recent data raises the possibility of a rate increase in the summer. Elliott Jordan-Doak of Pantheon Macroeconomics also forecast a unanimous hold but suggested that if May surveys repeat the current pattern and the Middle East ceasefire remains fragile with disrupted oil flows, the MPC might be forced to increase rates in June or July. He projected one rate increase this year in June, followed by two cuts in 2027, bringing the rate to 3.5%.

Conclusion

In summary, the Bank of England is expected to keep interest rates unchanged at 3.75% at the upcoming meeting. However, the persistence of inflationary pressures and uncertainty surrounding the Middle East conflict leave open the possibility of future rate adjustments.

Vocabulary Learning

hold the rate
To keep the interest rate at its current level without increasing or decreasing it.維持利率不變
Example:The Bank of England is expected to hold the rate at 3.75%.
nailed on
Certain to happen; guaranteed.確定無疑的
Example:Thomas Pugh described the outcome as 'nailed on,' predicting a unanimous 9-0 vote to hold.
pre-emptive measure
An action taken in advance to prevent a potential problem or risk.預防性措施
Example:A minority might vote for a 25-basis-point increase as a pre-emptive measure against the risk of higher inflation.
resilience
The capacity to recover quickly from difficulties or withstand adverse conditions.韌性; 復原力
Example:He cautioned that the resilience of recent data raises the possibility of a rate increase in the summer.
stockpiling
To accumulate large quantities of goods, often in anticipation of shortage or price increase.囤積
Example:Retail sales volumes were stronger than expected, partly due to motorists stockpiling fuel.

Sentence Learning

The Bank of England's Monetary Policy Committee is scheduled to vote on the base interest rate on April 30, with economists widely anticipating a decision to hold the rate at 3.75% despite rising inflation linked to the ongoing conflict in the Middle East.
This sentence uses 'despite' to contrast the expectation of holding rates with rising inflation. The passive voice 'is scheduled' focuses on the action rather than the subject. The phrase 'linked to' is a reduced relative clause (which is linked to).呢句句子用咗'despite'嚟對比預期維持利率同上升嘅通脹。被動語態'is scheduled'強調動作而唔係主體。'linked to'係一個縮減嘅關係從句（即which is linked to）。
This was driven by a sharp increase in motor fuel prices, which went up 8.7% month-on-month, the largest such rise since June 2022.
The passive voice 'was driven by' introduces the cause. The relative clause 'which went up' adds detail about motor fuel prices. The appositive phrase 'the largest such rise since June 2022' gives additional information about the rise.被動語態'was driven by'引出原因。關係從句'which went up'補充關於汽車燃油價格嘅細節。同位語短語'the largest such rise since June 2022'提供關於升幅嘅額外資訊。
Despite these inflationary signals, other data show the UK economy grew by 0.5% in February, exceeding forecasts of 0.1%, and retail sales volumes were stronger than expected, partly due to motorists stockpiling fuel.
'Despite' shows contrast between inflation signals and economic growth. The present participle phrase 'exceeding forecasts' acts as an adjective describing the growth. 'Partly due to' explains the reason for stronger retail sales.'Despite'顯示通脹信號同經濟增長之間嘅對比。現在分詞短語'exceeding forecasts'作為形容詞修飾增長。'Partly due to'解釋零售銷售強勁嘅原因。
Andrew Goodwin of Oxford Economics stated that the MPC is likely to keep the rate unchanged at 3.75%, as most members prefer to maintain a restrictive policy while gathering more information on how the energy shock affects the economy.
'As' introduces the reason for keeping rates unchanged. 'While' indicates that gathering information happens at the same time as maintaining policy. The 'how' clause explains what information they are gathering.'As'引出維持利率不變嘅原因。'While'表示收集資訊同維持政策同時進行。'how'從句解釋佢哋收集緊咩資訊。
Elliott Jordan-Doak of Pantheon Macroeconomics also forecast a unanimous hold but suggested that if May surveys repeat the current pattern and the Middle East ceasefire remains fragile with disrupted oil flows, the MPC might be forced to increase rates in June or July.
'If' introduces a conditional scenario with two conditions joined by 'and'. The passive 'might be forced to increase' suggests external pressure. 'With disrupted oil flows' is a prepositional phrase describing the state of the ceasefire.'If'引入一個有兩個條件嘅假設情景。被動語態'might be forced to increase'暗示外部壓力。'With disrupted oil flows'係介詞短語描述停火狀態。