LONDON, March 19 (Xinhua) -- The Bank of England (BoE) has kept its benchmark interest rate unchanged at 3.75 percent, considering price hikes of energy and other commodity caused by the conflict in the Middle East, Britain's central bank said in a statement Thursday.
At its meeting on Wednesday, the BoE's Monetary Policy Committee (MPC) voted unanimously to maintain the bank rate at 3.75 percent. Members of the committee noted that the price hikes will affect households' fuel and utility prices and have indirect effects via businesses' costs in the UK.
Prior to this, there had been continued disinflation in domestic prices and wages, the MPC said, adding "CPI inflation will be higher in the near term as a result of the new shock to the economy."
The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, noting that "the risk of which will be greater the longer higher energy prices persist."
It is also assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs.
The United States and Israel launched massive attacks on Iran on Feb. 28, disrupting global shipping, sending oil prices soaring and shaking the global economy.
European gas and oil prices rose sharply in early trading on Thursday. The Dutch TTF benchmark, a key reference for European gas supply contracts, surged more than 30 percent to 70.7 euros (about 76.8 U.S. dollars) per megawatt-hour at the open, before easing to around 67 euros per megawatt-hour. The price has more than doubled from around 32 euros megawatt-hour before the conflict began.
Oil prices also moved higher. Brent crude, the international benchmark, rose to above 116 dollars per barrel in early trading.
The committee said it will continue to monitor closely the situation in the Middle East and its impact on global energy supply and prices, and act as necessary to ensure that CPI inflation remains on track to meet the 2 percent target in the medium term.
Britain's annual inflation rate fell to 3.0 percent in January amid easing price pressures, earlier data from the Office for National Statistics showed. ■
