Bank of England keeps rates on hold at 3.75% as Iran war shakes outlook

The Bank of England (BOE) in the City of London, UK, on Monday, Dec. 15, 2025. Bloomberg | Bloomberg | The Bank of England voted to keep its key interest rate on hold at 3.75% on Thursday, as widely expected by economists, as the Iran war continues to pose a dilemma for policymakers. The central bank was widely expected to stand pat on rates as it waits to see how the energy price crunch caused by the Iran war, and a concurrent reignition of inflationary pressures in the U.K., manifest themselves in the economy. The bank's Monetary Policy Committee voted in an 8-1 split to maintain the benchmark rate, known as "Bank Rate", at 3.75%, with known hawk BOE Chief Economist Huw Pill the only dissenter voting for a 25 basis-point increase. In a summary of its decision-making on Thursday, the BOE said it expected war in the Middle East to continue to push energy and fuel costs higher, noting that its ability to mitigate these pressures with monetary policy was limited. "The conflict in the Middle East means that prospects for global energy prices are highly uncertain. Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably," it noted. …