The Bank of England has held its main interest rate at 3.75% for the sixth consecutive meeting, but warned that continuing disruption to energy supplies could lead to higher borrowing costs. Governor Andrew Bailey said the longer energy-price volatility lasted, the greater its effect on inflation and the more likely the Bank would be to raise rates to return inflation to its 2% target.

According to the Bank, the conflict in the Middle East has disrupted global energy supplies, contributing to sharp rises in petrol and diesel prices. It now expects inflation to increase more than previously forecast and said the household energy price cap for January was expected to rise “substantially further”. Official figures showed UK inflation reaching 3.1% in August, up from 2.9% in July, and it has remained above the Bank’s target for nearly two years.

The decision was not unanimous. The Bank’s nine-member Monetary Policy Committee voted 6-3 to keep rates unchanged, while three members, including chief economist Huw Pill, supported an increase to 4%. The Bank said the UK economy had been more resilient than expected and raised its forecast for growth between July and September to 0.4%, from the 0.1% projected during the summer.

There were also signs of easing pressure in some areas. The Bank reduced its forecast for food-price inflation, saying it now expected food prices to rise by 4% by the end of the year, compared with an earlier estimate of 6-7%. However, it said higher energy costs had not yet spread into other parts of the economy, leaving the risk of further inflation if the shock persisted.

Higher rates are already affecting mortgage borrowers. Moneyfacts data cited by BBC News put average two-year and five-year fixed residential mortgage rates at 5.77% and 5.83% respectively. Mortgage broker Coreco said lenders were already repricing upwards, while one borrower, Andy Pargeter, expects his mortgage costs to rise by at least £300 a month when his existing 1.19% fixed-rate deal ends in November.

The Bank also announced changes to quantitative tightening. Rather than continuing its annual pace of government-bond sales, it will sell smaller amounts over eight years while reducing its remaining £488bn bond stockpile. Following the announcement, the yield on 30-year UK government bonds fell from 5.86% to 5.75%, while the 10-year yield declined from 5.31% to 5.22%, according to BBC News.