BOE's Bailey Signals Possible 25-Basis-Point Rate Hike If Geopolitical Conflict Persists

Bank of England Governor Andrew Bailey indicated that a further 25-basis-point interest rate hike could be justified if Middle East conflict does not de-escalate. The Monetary Policy Committee maintained the benchmark Bank Rate at 3.75% via a surprise 9-0 vote split, even as UK year-over-year inflation stood at 3.5%. Bailey earlier attributed rising gilt yields to risk premia rather than hike expectations, but later warned of energy shock risks and declined to commit to an interest rate peak. Following the decision, the British pound pared its initial gains.