Central banks hold rates steady as Middle East conflict lifts energy prices and inflation risks

Why are central banks reacting to the Middle East conflict?

The conflict has pushed up global oil and gas prices, which can feed into higher fuel, transport and household energy costs and then into broader inflation NYT,Daily Mail,Independent.

Did the Bank of England rule out future rate cuts?

No. Governor Andrew Bailey said further cuts are “not on the horizon” and that the Bank is monitoring developments closely, while also signaling that rates could rise if inflation pressures persist Daily Mail,Independent,Independent.

What changed in the Bank of England’s inflation forecast?

The Bank said inflation, which had been expected to fall toward its 2% target, is now forecast to rise to around 3% in the second quarter of 2026 and potentially 3.5% in the third quarter Guardian,Independent.