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The Markets
by Proactive
Proactive UK has moved.
Coverage of London’s small caps continues on proactiveinvestors.com
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The Markets
by Proactive
Proactive UK has moved.
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Go to Proactive UK
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The Markets
by Proactive
Proactive UK has moved.
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Banks

Bank of England leaves interest rates unchanged despite fall in inflation

The Bank of England's monetary policy committee has kept interest rates unchanged, as expected, despite inflation falling in line with its target last month.

MPC members voted by the same 7-2 majority to maintain the bank rate at 5.25%, again as expected, with only two members still looking for a rate cut.

The committee noted that the timing of the general election on 4 July was "not relevant to its decision at this meeting", insisting it only acted on the basis of what was deemed necessary to keep inflation at 2% on a sustainable basis in the medium term.

While the consumer price index measure of inflation returned to the MPC's 2.0% target in May, the committee said it felt monetary policy "will need to remain restrictive for sufficiently long" to keep inflation at target in the medium term, with CPI expected to rise slightly in the second half of the year.

However, the meeting minutes revealed that for some committee members the decision to hold rates steady was "finely balanced" as they noted that the softening of recent inflation data was continuing even with stubbornly high wages and service prices.

These members are willing to look through high pay growth and high levels of service price inflation and they are more worried about the outlook for growth.

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