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Bank of England Holds Interest Rate at 4.25%

Inflation remained at 3.4% in May, fuelled by food price rises; global uncertainties have postponed further easing until August

Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester, Britain, Septem,ber 21, 2018. REUTERS/Phil Noble/File Photo
Image
A general view of the Bank of England in the City of London, Thursday, March 17, 2022.

Overview

  • The Monetary Policy Committee voted 7-3 on June 19 to keep the Bank rate at a two-year low of 4.25%.
  • Annual consumer price inflation eased to 3.4% in May but stayed above the 2% target driven by rising costs for food and non-alcoholic drinks.
  • Escalating conflict in the Middle East and uncertainty over US tariffs have heightened the risk of further oil-price shocks.
  • Official data showed the UK economy contracted by 0.3% in April amid higher business taxes and a record decline in exports to the United States.
  • Markets now price in a quarter-point rate cut at the Bank’s August meeting as forecasts project inflation to remain elevated through 2025.