UK Prime Minister Keir Starmer will chair a meeting of the government's emergency response committee on Tuesday, focusing on the impacts of the Middle East conflict, with representatives from the Bank of England in attendance. Speaking to union members on Monday, Starmer stated: "Tomorrow I will chair an emergency committee meeting to discuss the [war's] effects and have invited relevant Bank of England personnel to participate. This is to ensure you are confident that during this crisis, we will stand with working people." He added, "I must be frank about the issues concerning the Middle East situation because the reality is its economic consequences could persist for some time." Using fuel prices as an example, he pointed out that related costs have already increased. The Bank of England is set to announce its latest interest rate decision on April 30. Markets widely expect the Monetary Policy Committee (MPC) to keep the benchmark rate unchanged at 3.75%, awaiting greater clarity on the Middle East conflict. However, as the war approaches its third month, committee members may adopt innovative communication methods to demonstrate how they will address prolonged market turbulence. The Bank of England is expected to conduct multiple scenario stress tests this week, revealing how it might respond to sustained energy price shocks. Central bank officials believe that, given the damage to Middle Eastern infrastructure, futures signals indicating a significant easing of energy price pressures may be overly optimistic. While these pricing trends will support the Bank's core forecasts, it may acknowledge the possibility of more negative outcomes, which would have damaging effects on economic growth and inflation. Michael Saunders, a senior adviser at Oxford Economics and former Bank of England rate-setter, said: "They are likely to model energy price scenarios, but may also model varying degrees of secondary effects for a given energy price path." Due to the "wide range of possible outcomes," these scenarios will "play a central role" in their decision-making. A persistent energy shock could further dampen growth and employment while increasing the risk of an inflationary feedback loop—as workers demand higher pay to compensate for losses, and businesses facing profit squeezes attempt to raise prices. However, evidence of such effects has so far been limited, as neither employees nor firms have significant bargaining power in a period of corporate layoffs and fragile demand. Money markets currently price in two 25-basis-point rate hikes by the Bank of England this year, but many economists still believe the central bank is more likely to keep policy unchanged. Most economists view the UK economy as facing high risks of stagflation—typically defined as a combination of slow growth, rising unemployment, and persistent price increases—providing additional rationale for holding rates steady. Economists Dan Hanson and Matt Bunny noted: "The Bank of England appears set to hold rates steady in April as it continues to assess the economic impact of the energy shock. It is likely to maintain its 'ready to act' guidance, with a minority of policymakers calling for a pre-emptive rate hike. While these votes may make headlines, we believe the majority will be wary of raising rates amid weak demand. This aligns with our view that rates will ultimately remain stable this year." Bank of England Governor Andrew Bailey's cautious stance on rate hikes supports economists' views. Earlier this month, Bailey stated in an interview that, in the face of energy price shocks triggered by the Middle East war, the Bank would "not rush to judgment" on raising interest rates. Bailey clearly indicated that increases in oil and gas prices "undoubtedly" feed into overall price levels, but deciding on interest rates has become "very, very difficult" due to multiple intertwined uncertainties. Bailey further explained: "Some very tough judgments indeed need to be made. We will not rush to conclusions on these matters because there are many uncertainties—not only about how the situation will evolve but also about how these changes will transmit and affect the UK economy." Market analysts suggest Bailey's comments aim to temper financial market expectations for aggressive rate hikes from the Bank of England. Back in March, when the Bank decided to hold rates steady, Bailey had warned that market expectations for subsequent hikes were an "overreaction" and "getting ahead of themselves."