On September 17 the Bank of England held its base rate at 3.75% and warned that a protracted war in the Middle East could force it to raise the cost of credit, with oil above $100 a barrel as the backdrop.
The pattern is global. The U.S. Federal Reserve raised rates on September 16 for the first time since 2023, and the European Central Bank did the same a few days earlier, according to The Guardian. Al Jazeera documents that the driver of the renewed surge is energy: crude topped $100 a barrel in the previous week, six months into the war with Iran, with the Strait of Hormuz still disrupted and Houthi operations threatening Saudi supply. For Mexico and Latin America the transmission channel is direct: costlier energy drives up transport and electricity, and a global rate cycle that refuses to close keeps the cost of external financing high.
The British figures illustrate the pressure. UK inflation rose from 2.9% in July to 3.1% in August, according to the official figures reported by The Guardian, and the bank itself projects it will reach 4% in early 2027. The monetary policy committee voted 6 to 3 to hold the rate. Andrew Bailey, governor of the Bank of England, noted that as long as volatility persists, the greater the impact on inflation and the more likely the institution will have to raise the rate to bring it back to its 2% target. City traders are pricing a quarter-point hike from November and three more to 4.75% next year. The bank also announced a plan to sell 146 billion pounds of government bonds to the Treasury, at a pace of 20 billion a year through 2034.
The calendar keeps the pressure on: the British committee meets again in November and traders are already pricing a hike from that month. For emerging economies, the week's takeaway is that, as long as the energy shock shows no sign of easing, external financing stays expensive.
This article was written with the assistance of artificial intelligence from verified sources and reviewed by a human editor before publication.