Bank of England Expected to Hold Rates Amid Middle East Conflict Inflation Risks

The Bank of England is expected to keep interest rates steady at 4.25% amid persistent inflation and geopolitical tensions, particularly the Israel-Iran conflict, which has driven up oil prices and threatens to exacerbate inflationary pressures. Despite UK inflation easing slightly to 3.4%, economists warn that rising energy and food costs could push inflation closer to 4%, complicating the Bank's monetary policy decisions and potentially delaying further rate cuts until August or later. The conflict's impact on oil prices raises concerns about a possible wage-price spiral, with higher energy costs potentially fueling greater wage demands. Meanwhile, the Bank of England's cautious stance contrasts with the European Central Bank's recent rate cuts, although ECB officials urge prudence and data-driven decisions amid ongoing economic uncertainties. Key indicators such as a cooling labor market and slowing wage growth add complexity to the inflation outlook, suggesting that central banks must balance economic support with inflation control in an unstable global environment.