The Bank of England (BOE) in the City of London, UK, on Monday, Dec. 15, 2025.

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The Bank of England voted to keep its key interest rate on hold at 3.75% on Thursday, as widely expected by economists, as the Iran war continues to pose a dilemma for policymakers.

The central bank was widely expected to stand pat on rates as it waits to see how the energy price crunch caused by the Iran war, and a concurrent reignition of inflationary pressures in the U.K., manifest themselves in the economy.

The bank's Monetary Policy Committee voted in an 8-1 split to maintain the benchmark rate, known as "Bank Rate", at 3.75%, with known hawk BOE Chief Economist Huw Pill the only dissenter voting for a 25 basis-point increase.

The British pound was up 0.4% against the dollar, at $1.3473, after the decision, while borrowing costs fell as the yield on the benchmark 10-year gilt dropped 6 basis points to 5.014%.

In a summary of its decision-making on Thursday, the BOE said it expected…