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Bank of England holds Bank Rate at 3.75% amid Middle East risk
In its monetary policy report, the BoE projects CPI inflation at 2.6% one year ahead and cites a lower risk of second round inflation effects.
The Bank of England kept its Bank Rate unchanged at 3.75% in a 6-3 vote, according to Action Forex, with policy makers split and Mann joining the hawkish camp.
In its monetary policy report, the BoE said its central projection, conditioned on energy prices based on futures curves and moderate persistent second round effects, places CPI inflation at 2.6% one year ahead, lower than the scenarios it presented in April.
The BoE also pointed to a lack of evidence of second round effects, while noting the UK economy is in a better position than expected in April, supported by stronger GDP growth and lower unemployment.
Governor Bailey highlighted that it might be necessary to act before any broader inflation effects appear, and the bank said future policy will depend heavily on developments in the Middle East, with Ramsden indicating a potential resumption of the cutting cycle if risks subside and disinflation continues.