“Keeping interest rates unchanged will feel like a demoralising setback for households struggling with this renewed energy shock and those businesses trying to access enough finance to help mitigate the damaging headwinds from the Iran war.
“The near unanimous backing for this decision suggests that interest rates are currently in a holding pattern as most policymakers wait for the fog to clear on the economic fallout from the Iran conflict before deciding whether to raise rates.
“With the Bank’s new forecast scenarios indicating that stagflation is now a critical risk, future policy decisions will become more fraught as rate-setters try to strike the balance between dealing with rising inflation without further damaging wider economic activity.
“Though interest rates could well remain at 3.75% for the rest of the year, it will become an increasingly close call with the vote split among committee members likely to turn more hawkish if inflation surges as the Bank is forecasting.”
ENDS
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Chartered accountants are talented, ethical and committed professionals. ICAEW represents more than 210,000 members and students around the world. 98 of the top 100 global brands employ ICAEW Chartered Accountants.* 87% of FTSE 100 companies, and 81% of FTSE 250 companies in the UK, have an ICAEW member on their board.
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* includes parent companies. Source: ICAEW member data March 2025, Interbrand, Best Global Brands 2024.
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