Bank of England leaves interest rates on hold at 3.75%

The Bank of England kept Bank Rate unchanged at 3.75% in an 8-1 vote, with the MPC holding fire despite a clear upside shift in UK inflation risks from the Iran war and surging energy prices. The decision was a modestly dovish surprise versus market expectations for additional tightening later this year, after six rate cuts since mid-2024. UK inflation accelerated to 3.3% in March from 3.0% in February, while services-sector cost pressures posted their biggest jump since 1996, according to the latest S&P Global PMI data. Petrol and diesel prices have risen sharply as oil moved above $100/bbl, with the article pointing to the effective closure of the Strait of Hormuz as the key external inflation shock. For precious metals, the immediate read-through is supportive for gold on the margin: the BoE is pausing even as inflation re-accelerates, reinforcing the broader theme that central banks are becoming more cautious about growth/energy shocks. Near term, the key catalyst is whether the conflict-driven oil spike feeds into UK and broader developed-market inflation prints enough to delay further easing and keep real yields firmer for longer.