Bank of England keeps interest rates steady
The Bank of England (BoE) kept the policy rate constant at 5.25 percent in May, within expectations.
The Bank of England (BoE) kept the policy rate unchanged at 5.25 percent.
The central bank was expected to keep its benchmark interest rate steady at 5.25 percent (the highest level since 2008) for the sixth consecutive month following monetary policy discussions in May.
It is estimated that the bank’s interest rate will be reduced to 4.5 percent by successive interest rate cuts starting from August until the end of 2024.
BoE Deputy Governor Dave Ramsden and member Swati Dhingra called for the interest rate to be reduced from its current level of 5.25 percent. The other seven members of the Monetary Policy Committee preferred no change, saying they needed more evidence that inflation would fall.
It was the sixth meeting in which the UK central bank has left its benchmark lending rate firmly in what it describes as restrictive territory, aiming to quell wage and price pressures that have reached four-decade highs in late 2022.
BoE officials predict that inflation, which peaked at more than 11 percent, will fall to its 2 percent target in the second quarter due to lower energy bills and then rise more smoothly than previously anticipated later in the year.
Bank of England Governor Andrew Bailey said: “We have received encouraging news on inflation and we think it will approach our 2 per cent target over the next few months. We need to see more evidence that inflation will remain low before we cut interest rates. We are optimistic that things are moving in the right direction.”