Inflation will rise this year, says Bank of England as rate-setters split over hike

The Bank of England held interest rates at 3.75 per cent today, despite fears that the recent spike in energy prices could prompt another inflation shock. Three MPC members voted to increase bank rate by 0.25 percentage points, to 4 per cent. The Bank of England said it expects the headline rate to rise later this year 'as the effects of higher energy prices continue to pass through.' The Bank expects higher energy prices to add around 0.4 percentage points to CPI in the second half of the year, while higher petrol prices will add 0.3 points. The fall in the headline inflation rate provides rate setters with enough cover to continue their 'wait and see' approach.