The Bank of England (BoE) has recently decided to maintain its bank rate at 5.25%, as was widely expected. This decision was announced on Thursday, June 20, 2024.
Furthermore, seven policymakers voted to hold rates steady, while two members Dave Ramsden and Swati Dhingra voted for a 0.25 percentage point cut.
This decision comes amidst a complex economic landscape. With the BoE balancing concerns about persistent inflation particularly in the services sector with the need to support economic growth.
The bank rate in the UK remains at 5.25%. This decision reflects a finely balanced approach to managing inflation and supporting the economy.
The BoE is expected to begin reducing bank rates at some point in Q4 2024, in response to signs of easing inflation.
Bank Rate: Bank Rate is the single most important interest rate in the UK. In the news, it’s sometimes called the ‘Bank of England base rate’ or even just ‘the interest rate’.
The Bank of England (BoE) keeping interest rates steady despite slowing inflation is likely due to several reasons:
- With the UK general election looming on July 4th, the BoE may be hesitant to make any significant changes to interest rates. As this could be perceived as politically motivated and potentially impact the election outcome.
- Despite the recent slowdown in inflation. There may still be underlying price pressures in the economy that the BoE is concerned about. Keeping rates steady could help to mitigate these risks and prevent inflation from rising again.
- The UK economy is facing a period of uncertainty due to Brexit and other global factors. The BoE may be choosing to maintain a cautious approach by keeping rates steady until there is more clarity about the economic outlook.
Source: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2024/june-2024