Bank of England holds rates at 5.25%

The Bank of England’s Monetary Policy Committee (MPC), in its latest meeting on Thursday opted to maintain the benchmark interest rate at 5.25 per cent.

While the majority voted to hold rates steady, two members preferred a 0.25 per cent reduction. This reflects ongoing debate within the MPC about balancing inflation and economic growth.

Inflation, as measured by Consumer Price Index (CPI), has fallen from 3.4 per cent in February to 3.2 per cent in March.

The MPC expects inflation to return close to two per cent soon, but may rise slightly in the second half of 2024 due to energy price fluctuations.

Geopolitical factors pose upside risks to the near-term inflation outlook, though their impact on oil prices has been limited so far.

The MPC expects inflation to approach target soon, with a slight increase in the second half of the year due to energy price adjustments. The May Monetary Policy Report predicts inflation to reach 1.9 per cent in two years and 1.6 per cent in three years.