The Bank of England has held interest rates at 3.75% for the fifth consecutive meeting.

Members of the Monetary Policy Committee (MPC) voted in favour of freezing the base rate, as predicted by most economists.

At its meeting yesterday, the MPC voted by a majority of 6–3 in favour of holding rates.

Three members voted to increase base rate by 0.25 percentage points, to 4%.

Providing further context to the decision, the rate-setting committee says that conflict in the Middle East is still putting pressure on households and businesses.

Even though inflation has fallen by more than expected to 2.6%, the MPC believes it will rise again because of energy prices and the knock-on impact on businesses, which will have to raise costs.

Households and businesses are also facing higher mortgage and commercial finance rates than before the conflict, which is weighing on confidence and spending power, the Bank says.

Bank of England governor Andrew Bailey says: “Today, we’ve held Bank Rate at 3.75%.

“Inflation has fallen faster than we’d expected, but the conflict in the Middle East continues to mean high and volatile energy prices.

“That will cause inflation to rise again later this year. However the conflict unfolds, our job is to make sure any increase in inflation is temporary and that it comes back to our 2% target.”

However, mortgage industry experts are bracing for a potential rate rise in the coming months.