The Bank of England held its benchmark interest rate unchanged at 3.75 percent for a fifth consecutive meeting on July 30, 2026.
Policymakers evaluated inflationary risks stemming from volatile global energy prices and Middle East military conflicts.
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Domestic inflation fell to a 15-month low of 2.6 percent last month, yet borrowing costs remained at their lowest since February 2023.
The decision followed escalating tensions in the Middle East, where oil prices surged toward $100 per barrel after Brent crude climbed around 30 percent since recent hostilities began.
Financial markets had expected the move, which came one day after the US Federal Reserve also held its interest rates steady.
Short-term UK government borrowing costs declined after the announcement, with two-year gilt yields dropping from 4.44 percent to 4.38 percent.
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The FTSE 100 stock index reached a record high near the 11,000 threshold.
Economic analysts noted that while money markets speculate potential rate increases could occur by November, underlying domestic wage pressures continue to ease.
Berenberg senior UK economist Andrew Wishart observed that softening labor market conditions and stabilizing home-grown price pressures could eventually prompt central bank officials to resume rate reductions by the end of the year.
In corporate developments, aerospace manufacturer Rolls-Royce raised its full-year underlying operating profit forecast to between £4.7 billion and £4.9 billion after reporting a 48 percent surge in first-half underlying pre-tax profit to £2.5 billion.
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Chief Executive Tufan Erginbilgiç said the company's transformation continues to deliver, highlighting operational and strategic progress in civil aerospace, defence, power systems, and nuclear energy.
