Bank of England Holds Rate at 3.75% as Iran War Risks Loom

The Bank of England held its key rate at 3.75 percent on Thursday, with one MPC vote for a hike and inflation at 3.3 percent above target. The MPC scrapped its usual central forecast in favour of three scenarios, the most extreme of which could require a "forceful" rate increase. The decision came in coordinated rhythm with the Federal Reserve (an 8-4 hold, the narrowest split in decades), the European Central Bank, the Bank of Japan and the Reserve Bank of Australia — all left rates unchanged but signalled hikes to prevent the Iran-war energy spike from spilling into broader inflation. Brent stayed elevated as the United States widened a coalition through the prior day's "Maritime Freedom Construct" announcement; the cost-of-living political pressure on the Government continued to build, with Which? having reported that three million UK households were skipping meals.

The day's most painful diplomatic file came from Tehran. British couple Lindsay Foreman and Craig Foreman, arrested in Iran in January 2025 while on a motorcycle trip, were sentenced to 10 years in Evin prison on espionage charges they deny. They are held in harsh conditions and isolation; the Foreign, Commonwealth and Development Office described the sentencing as "deeply distressing" and called for their immediate release. The Foreign Affairs Committee was briefed on the FCDO's options for consular access and possible prisoner-exchange overtures, against the existing FCDO 2030 restructuring backdrop and the Olly Robbins Mandelson-vetting fallout that has destabilised senior leadership.

Two terrorism trials closed on the same day. At the Old Bailey, Abdullah Albadri — a 34-year-old migrant who arrived in the UK by small boat 16 days before the attack — was found guilty of preparing a terror-related knife attack on the Israeli embassy in London. He attempted to scale the embassy railings carrying two knives, motivated by Israel's actions in Gaza. The trial's small-boat-arrival timeline placed the case at the centre of the migration-and-counterterrorism political debate that the Government's prior-day £25 million Jewish-community-security package and proxy-group fast-track legislation had accelerated. In a separate Old Bailey case, Alfie Coleman, a 19-year-old Tesco worker and white supremacist, was convicted of preparing terrorist acts after MI5 and police foiled his plan for a mass shooting using a Makarov pistol; his plot included targeting the home of the Lord Mayor.

The Government's Golders Green response also drew political backlash. Prime Minister Keir Starmer and Home Office minister Alex Davies-Jones faced criticism for linking the April 29 stabbing of two Jewish men in Golders Green to pro-Palestine protests. Starmer called for prosecution of those chanting "globalise the intifada"; Conservative and Liberal Democrat figures questioned the legal foundation for prosecuting protest speech, and civil-rights groups warned of a chilling effect on legitimate political demonstration. Met Police Commissioner Sir Mark Rowley defended the JTAC threat-level rise to "severe" announced the prior day.

The day's second public-policy crisis was a pharmacy one. Pharmacy bodies and the Royal Pharmaceutical Society told reporters and parliamentary committees that hundreds of everyday medications in England were increasingly hard to obtain, with NHS reimbursement systems making pharmacies dispense at a loss. Shortages were affecting medicines for epilepsy, Parkinson's, heart conditions and antibiotics; the report tied the immediate pressure to the Iran-war-driven surge in global active-pharmaceutical-ingredient prices and to UK-specific reimbursement-rate inflexibility.

The day's other moving parts:

- Around 500 labour groups in the United States organised a "May Day Strong" economic blackout — about 3,500 events calling for "no school, no work, no shopping" — explicitly tying the action to Iran-war-driven energy and food costs; UK trade unions held smaller solidarity events, with TUC officials warning about Iran-war wage-erosion pressure. - Superdry co-founder James Holder was found guilty of raping a woman in Cheltenham in May 2022; the jury acquitted him of a separate assault charge. He was remanded in custody pending sentencing on May 7. The case kept high-profile sexual-violence prosecutions in the political-press spotlight. - The Atlantic Council Patriot-stocks warning continued to set the tone for MoD discussions on UK air-defence support to Ukraine; Iran-war demand on US-managed interceptor production remained the principal near-term constraint heading into Russia's expected summer escalation. - The UK Biobank breach (500,000 volunteers' health data on Alibaba) and the Cheshire Police Arpol arrests both progressed quietly; Government attention concentrated on JTAC's threat level, the Foreman case, and the Old Bailey verdicts. - Closing the week, the FCDO leadership crisis remained unresolved, with key vacancies still unfilled and Foreign Secretary James Cleverly reportedly preparing a parliamentary statement on the FCDO 2030 restructuring next week.