The Bank of England is expected to deliver a "hawkish statement" but keep rates unchanged this week, as soaring energy prices add uncertainty to the policy outlook.

(1) Economists predict that amid renewed escalation of conflicts in the Middle East and soaring energy prices, the Bank of England will signal a “hawkish stance” this week but keep interest rates unchanged at 3.75%. Since the June meeting, the breakdown of the US-Iran ceasefire has pushed global oil prices back near $100 per barrel, and European natural gas prices have risen to their highest levels since the early days of the conflict. If shipping in the Gulf continues to be disrupted, oil prices could climb even further.(2) The UK economy has performed better than the Bank expected, with GDP growing by 0.7% in the three months to May. Meanwhile, inflationary pressure has eased: the CPI dropped to 2.6% in June, marking three consecutive months below expectations; slowing wage growth and falling food prices also provide the Bank with room to observe.(3) Economists believe the Monetary Policy Committee will keep rates unchanged but clarify: if energy prices surge significantly further, or a one-off price shock develops into more persistent inflationary pressure, the Bank will be ready to tighten policy at any time.