Why did the Bank of England decide to hold interest rates despite warning of 'Trumpflation' and rising inflation?

The Bank of England held interest rates because it judged that the UK’s weak real economy — with GDP growth forecast at just 0.8% this year, unemployment expected to peak at 5.5% next year, and cautious consumer behaviour — reduces the risk of 'second-round effects' (e.g., widespread wage and price spirals), making immediate rate hikes inappropriate; additionally, financial markets had already pushed borrowing costs up by more than half a percentage point, effectively delivering part of the tightening the Bank might otherwise have imposed.

What are the projected economic impacts of the Middle East conflict and 'Trumpflation' on UK households, according to the Bank of England?

According to the Bank of England, the conflict-driven surge in oil and gas prices will raise average mortgage repayments by £80 a month, push food price inflation to 4.6% by autumn, and cause utility bills to jump in July and stay high through winter; overall inflation is now expected to peak above 3.5% by year-end — over one percentage point higher than pre-war forecasts — and could exceed 6% under the worst-case 'Scenario C' where oil hits $130/barrel and stays there.

Bank of England Holds Interest Rates Despite 'Trumpflation' Warning

Apr 30, 2026

The Bank of England maintained interest rates despite warnings of rising inflation driven by Middle East conflict-induced oil and food price hikes. Policymakers cite economic weakness and market borrowing costs, though further rate rises may occur if inflation exceeds forecasts.

theguardian

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