The Bank of England holds interest rates again at 5.25%
The Bank of England’s Monetary Policy Committee (MPC) has today decided to keep the Bank Rate at 5.25%, with 7 members in favour and 2 preferring a decrease to 5%.
The decision was based on updated projections outlined in the May Monetary Policy Report. Despite stronger growth in the United States compared to the euro area, inflationary pressures have moderated somewhat globally. UK GDP is expected to grow modestly, with a margin of economic slack projected due to the restrictive monetary policy stance.
Inflation indicators show a decline in services consumer price inflation but remain elevated. The labour market appears to be loosening but remains relatively tight by historical standards. CPI inflation is forecasted to approach the 2% target in the near term but may increase slightly later in the year due to energy-related factors. Looking ahead, CPI inflation is projected to be 1.9% in two years and 1.6% in three years.
The MPC’s primary goal is to maintain price stability, with the inflation target always in focus. Monetary policy will ensure that CPI inflation returns to the 2% target sustainably in the medium term. The current stance of monetary policy is considered restrictive, aiming to counter inflationary pressures and bring inflation back to target. The Committee remains vigilant, ready to adjust policy as needed based on economic data and indicators of inflation persistence and economic resilience. The duration of the current Bank Rate level will be continually assessed based on incoming data and its impact on inflation risks.
Read more: Bank rate maintained at 5.25% – May 2024
