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On April 30th, the Bank of England, in sync with the Federal Reserve, kept its key interest rate unchanged and hinted at a possible increase in borrowing costs soon to curb soaring inflation triggered by the Middle East conflict. The war with Iran has driven up oil and gas prices, and despite the suspension of military operations, the Strait of Hormuz remains closed, keeping energy prices persistently high. Like other central banks, the Bank of England has adopted a wait-and-see approach to the surge in inflation driven by rising energy prices, with the fate of the Strait being key to its final policy decision. With little progress on reopening the Strait, the Bank of England signaled that the waiting period may be coming to an end. The Bank of England stated, "There is a risk of a substantial second-round effect on price and wage setting, which policy needs to resist." Chief Economist Peale, one of the nine members of the Monetary Policy Committee, voted to raise the key interest rate to 4%. Peale stated, "Uncertainty is unlikely to dissipate anytime soon, but it is clear that rising energy prices have posed an inflationary shock to the UK economy."

The Bank of England stated that inflation could have a substantial second round of impact on wages and price settings, which policy needs to control.

Bank of England Governor Bailey: Given the UK economic situation and uncertainties in the Middle East, it is reasonable to keep interest rates unchanged at 3.75%.

Bank of England: CPI may rise even higher this year as the effects of rising energy prices become more apparent.

Bank of England: Forecasts show that in the worst-case scenario of inflation, if interest rates rise only as the market expects, inflation will peak at 6.2% in the first quarter of 2027.

The yield on 10-year UK gilts fell 4 basis points to 5.013% after the Bank of England's decision, down from 5.037% previously.

The Bank of England's Scenario A suggests that short-term shocks will not produce secondary effects.

The Bank of England's Scenario C predicts that a sharp rise in energy prices will lead to a stronger secondary inflationary effect.

UK government bond yields fell after the Bank of England kept interest rates unchanged.

Bank of England: Need to combat the effects of a second round of inflation.

The Bank of England's Scenario A forecasts that inflation will reach 3.6% by the end of 2026 and fall to 1.7% by the second quarter of 2029.

The Bank of England kept interest rates unchanged, and the FTSE 100 index was essentially flat, currently up 1.2%.

Bank of England: Weak economy may dampen inflationary pressures.

An Iranian official stated that the scenario of a blockade will fail and that Iran will never lose the Strait of Hormuz.