Investing.com – The Bank of England kept its lowered interest rates unchanged at its first policy-setting meeting of the new year earlier Thursday, with inflation still significantly higher than target.
The maintained its Bank Rate at 3.75%, as widely expected, as policymakers retained a cautious stance given persistent inflation concerns and despite signs of a weakening labor market.
Five members of the nine-strong Monetary Policy Committee voting for interest rates to remain unchanged, and four policymakers called for a reduction.
The Bank of England cut interest rates by 25 basis points in December, and suggested at the time that rates were “likely to continue on a gradual downward path.”
That decision, like this one, had been a close-run thing, with five members voting for interest rates to fall, and four pushing for an unchanged rate.
Hiring conditions remain weak and pay growth is slowing rapidly, noted analysts at ING, but with above 3%–coming in at 3.4% in December–and memories of the 2022 price spike still fresh, the policymakers have decided to maintain their cautious stance.
Additionally, UBS forecasts two cuts this year (March and June), with risks skewed toward more cuts, and the Swiss bank predicts the BoE’s updated projections will show inflation returning to the 2% target by end-2026.