Economist: Despite Soaring Oil Prices, Bank of England Expected to Keep Interest Rates Unchanged

BlockBeats News, July 27th, Economists predict that against the backdrop of renewed Middle East conflict and another surge in energy prices, the Bank of England will take a "hawkish stance" at this week's meeting but will keep the interest rate unchanged.

Since the Monetary Policy Committee's last meeting in June, the breakdown of the US-Iran ceasefire agreement has pushed global oil prices back to around $100 per barrel, and European natural gas prices have surged to their highest level since the beginning of the conflict. If shipping routes in the Gulf region remain blocked, oil prices could rise further. The UK economy has outperformed the Monetary Policy Committee's expectations in the early stages of the conflict, with GDP growing by 0.7% in the three months to May. There is little sign at present that the energy shock will generate more persistent price pressures. The CPI has been below expectations for three consecutive months, dropping to 2.6% in June. Wage growth, one of the main sources of inflationary pressure, has slowed, and food price increases have also eased.

Economists say this will allow the Monetary Policy Committee to keep the interest rate at 3.75% at Thursday's meeting and signal that if energy prices surge significantly further or if a one-off price shock begins to evolve into a more enduring issue, the Committee will be prepared to tighten policy.