Bank of England holds interest rates at 3.75% amid Iran war peace prospects

A person shields themselves from the rain while walking near the Bank of England building on the day the Monetary Policy Committee lowered interest rates, in London, Britain, Dec.18, 2025. Toby Melville | Reuters The Bank of England held U.K. interest rates at 3.75% on Thursday, as policymakers continue to balance the need to address above-target inflation with lackluster economic output. The hold, which was in-line with the expectations of economists polled by Reuters, was backed by seven of the nine monetary policy committee members in the BOE's May meeting. BoE chief economist Huw Pill and Megan Greene, an external member of the rates-setting Monetary Policy Committee, were the two dissenting voices. Pill and Greene both cast votes to hike the BOE's "base rate" by 25 basis points to 4%. The decision comes as higher energy costs in the wake of the Iran war have pushed inflation higher in economies across the globe, and the U.K. — a net energy importer — is particularly vulnerable to price shocks. In a summary of its decision on Thursday, the BoE said that while prices have come down since the initial spike, the war "makes it hard to predict what is going to happen with them." The U.K.'s own inflation rate held at a cooler-than-expected 2.8% in May, with price rises driven by rising transportation fuel costs, while data published last week showed the economy shrank by 0.1% in April. …