Bank of England set to hike interest rates to tackle higher inflation caused by Iran war

LONDON (AP) — The Bank of England is expected to raise interest rates Thursday for the first time in over three years in order to tackle the inflation shock caused by the Iran war.With inflation predicted to rise further over the coming months, economists reckon the nine policymakers on the Monetary Policy Committee have little option but to increase the bank's key rate to 4% from 3.75%. The anticipated increase would be the first since August 2023.The pressure on rate-setters has grown steadily over recent months, but the rise in inflation to an 11-month high of 3.5% in September — above their target of 2% — cemented market expectations of a rate hike this month and potentially more in 2027.The main cause behind the spike in inflation this year has been the sharp rise in fuel costs as a result of the Iran war and the ensuing bottlenecks in the Strait of Hormuz, which have squeezed global oil and gas supplies.“We imagine that many committee members’ patience with the recent rise in inf