"Today’s BoE decision to keep interest rates unchanged was fully expected, but going forward it remains apparent that a lot of uncertainty amongst MPC members exists. This can be seen in both the voting pattern and the comments."
"How this plays out is far from clear and although recent employment and inflation data has been of some comfort, investor attention and the Committee’s focus is likely to be on risks around the outlook ahead, and particularly so from an inflation standpoint.
"For now however, we expect the MPC will want to remain in a wait-and-see mode to assess developments both domestically and from events in the Middle East."
Michael Browne, global investment strategist, Franklin Templeton Institute:
"In many respects, the MPC has been fortunate in 2026, with financial markets doing much of the tightening on its behalf. Elevated gilt yields and higher borrowing costs have already tightened financial conditions without the Bank having to act."
"Looking ahead, that is unlikely to change. Renewed pressure on household energy bills from the Iran conflict, uncertainty surrounding the new government's fiscal plans and the impact of drought on food prices all point to persistent inflation risks. As a result, markets are likely to continue keeping pressure on financial conditions."
"Investors are currently pricing in at least one rate rise before the end of the year and a further increase by next spring, particularly as expectations for tighter monetary policy in the US continue to build."
"The MPC is not so much walking a tightrope, as being blown around by events."
Richard Carter, head of fixed interest research, Quilter Cheviot:
"The market is pricing in at least one interest rate rise in the UK this year, and with three members voting for an increase today and events in the Middle East show no sign of easing the pressure, this won’t change."
"The Monetary Policy Committee next meets in September, and a rate rise could be possible by then. However, complicating matters somewhat is the expected Budget from John Healey at some point in the Autumn. With cost-of-living measures expected to be front and centre of this, as well as additional spending commitments looking likely, it may be the BoE sticks to its holding pattern before acting, offering a level of policy stability that is craved right now."
Bank of England holds rates, but split widens
LONDON, July 30 (Reuters) - The Bank of England kept interest rates on hold as expected on Thursday, but a third policymaker backed a rate hike due to renewed conflict between the United States and Iran.
The rate-setting Monetary Policy Committee voted 6-3 to keep rates at 3.75% rather than the 7-2 split most economists polled by Reuters had expected.
Sterling was last up 0.2% at $1.3396 GBP=, and was also higher at 85.63 pence per euro EURGBP= - around a quarter of a percent up on the day.
Britain's rate-sensitive two-year bond yield remained lower GB2YT=RR, last trading at around 4.39%, while the blue-chip FTSE stock index held near record highs hit earlier in the session .FTSE.
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