Bank of England holds interest rates at 3.75% and signals rise is possible within months

The Bank of England expects the Iran conflict to keep inflation in the UK above 3% this year. Photograph: Vuk Valcic/Zuma Press/Shutterstock

The Bank of England has kept interest rates on hold and signalled it could be forced to increase borrowing costs in the coming months as the US-Israel war on Iran threatens to drive inflation in the UK above 3%.

The Bank’s rate-setting monetary policy committee (MPC) voted unanimously to keep its base rate at 3.75% amid growing concern over the surge in energy prices triggered by the conflict.