The Bank of England has left Interest rates unchanged with its Monetary Policy Committee voting by a majority of 6-3 to keep interest rates at 4.25%
The committee who has loosened monetary policy over the last few months said Underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen, leading to clearer signs that a margin of slack has opened up over time.
Measures of pay growth have continued to moderate and, as in May, the Committee expects a significant slowing over the rest of the year. The Committee remains vigilant about the extent to which easing pay pressures will feed through to consumer price inflation.
Dr Maria Paola Rana, Lecturer in Economics, University of Salford, comments: “Unsurprisingly, the Monetary Policy Committee (MPC) of the Bank of England has today kept the base interest rate cautiously at 4.25%. The decision was largely anticipated after yesterday’s news that inflation was higher than expected at 3.4% in May, with food prices soaring, as well as an expected increase in oil prices due to the conflict in the Middle East and Trump’s tariffs.
“The vote was more divided than expected. The signals of the labour market with lower wage growth and increasing unemployment should be considered, in what is a difficult balance between stimulating the economy and controlling inflation.
“So, no good news today, but there is wide expectation that the rate will be cut in August, when less uncertainty is expected.”
