The Bank of England decided to hold interest rates steady at its April meeting, warning that the war in the Middle East has made the outlook for energy prices highly uncertain, balanced by a softer labour market leading into the conflict.
Thursday's vote by the Monetary Policy Committee saw an 8-1 majority to keep policy unchanged at 3.75%, with Huw Pill the sole member to vote for a 0.25 percentage point increase.
Market bets on future BoE rate hikes remained unchanged in the immediate aftermath of the decision, pricing 73 basis points of increases, equivalent to almost three quarter-point hikes, by the end of the year.
Policymakers warned that the Middle East conflict has made the outlook for energy prices "highly uncertain", with inflation likely to rise further after reaching 3.3% last month.
The MPC said: "Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably.
"The policy stance required to achieve this will depend on the scale and duration of the shock, and how it propagates through the economy."
The MPC also published its April Monetary Policy Report, which it says sets out three scenarios that help to illustrate a range of possible outcomes for the UK economy.
"There is a risk of material second-round effects in price and wage-setting, which policy would need to lean against. But the labour market continues to loosen, and a weakening economy could contain inflationary pressures. Financial conditions have tightened since the conflict began, which will help to reduce inflation over time," the statement continued.
"Taking all the risks to the economic outlook into account, the Committee judges that it is appropriate to maintain Bank Rate at this meeting.
"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."