The Bank of England’s Monetary Policy Committee (MPC) voted 8 to 1 today to keep the base rate at 3.75%.
The MPC has hinted that after keeping the base rate pegged for most of this year so far it may have to consider increases if the price of oil continues to rise.
The price of Brent Crude hit $126 today as concerns over the direction of the Iran war caused it to spike.
In addition, the CPI rate of inflation is 3.3%, well above the bank's 2% target, and many experts believe it will rise further.
At its meeting ending on 29 April, the MPC voted by a majority of 8–1 to maintain the Bank Rate at 3.75%. One member voted to increase Bank Rate by 0.25 percentage points, to 4%.
The MPC said that the conflict in the Middle East means that prospects for global energy prices are "highly uncertain."
The committee said that CPI inflation was "likely" to be higher later this year as the effects of higher energy prices spread through the wider economy.
Despite this the MPC said there was some uncertainty about CPI as the labour market continues to loosen, and a weakening economy "could contain inflationary pressures."
Given the background, the MPC said that it was "appropriate" to maintain the Bank Rate now.
The MPC added: "The Committee will continue to monitor closely the situation in the Middle East and how its impact propagates through the economy. The Committee stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term."
The MPC will next announce its interest rate decision on 18 June.