General view of the Bank of England building in London.
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LONDON – The Bank of England on Thursday chose to keep interest rates steady at its June meeting, confirming market expectations even after UK inflation hit its 2% target.
The central bank keeps key interest rates at 16 years It has remained at a high of 5.25% since August 2023.
Seven members of the Monetary Policy Committee voted for no change and two members supported a rate cut, as they did during the bank’s May meeting.
In a statement, the Monetary Policy Committee noted that inflation had reached the central bank’s target and said “short-term inflation expectations” and wage growth indicators had slowed.
The MPC added that “it is difficult to measure the evolution of labor market activity” due to uncertainties in the ONS estimates.
Some analysts had previously thought inflation could fall, but it again said monetary policy would need to “remain restrictive long enough to bring inflation back to the 2% target sustainably”.
Inflation data on Wednesday showed that although Britain has experienced sharper inflation in the past two years, overall price growth fell to 2% in May, ahead of the United States and the euro zone in achieving the central bank’s target.
However, economists say the UK’s persistently high services sector rates and core inflation point to the potential for continued upward pressure.
Other European central banks, including the Swiss National Bank, the European Central Bank and the Riksbank, have begun easing monetary policy as they seek to restart economic growth.
The Fed is sometimes seen as the leader of central banks due to the United States’ outsized influence on the global economy, but it has left traders wondering when it will cut interest rates for the first time. Money market pricing points to a 64% chance of a rate cut in September, according to LSEG data.
This is a breaking news story and will be updated soon.
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