BOE Holds Base Rate at 5.25%... Highest in 16 Years
The Bank of England (BOE), the central bank of the United Kingdom, has kept its base interest rate steady at 5.25% per annum. This decision was made based on the assessment that although inflation has slowed, a clear stabilization has not yet been achieved.
According to Yonhap News and major foreign media, the BOE decided on the 20th (local time) at its Monetary Policy Committee meeting to maintain the base interest rate at 5.25% per annum. The BOE had raised the base rate 14 consecutive times since December 2021 but has held it steady for seven consecutive times from last September through this month.
The Consumer Price Index (CPI) inflation rate has reached the BOE's official target of 2.0% for the first time in about three years, but the BOE still views the inflation stabilization as not yet clear.
Andrew Bailey, Governor of the BOE, said, "It is good news that the consumer price inflation rate has returned to our target of 2%," but added, "We need to be confident that inflation will remain at a low level."
According to the minutes, some committee members pointed out that service price inflation remains high and wage growth is faster than expected, making it difficult to lower interest rates. However, other members viewed these indicators as temporary and unlikely to have a significant impact on future inflation rates.
According to major foreign media reports, financial market investors are increasingly betting that the UK’s interest rate cuts may be delayed until November.
However, there are also opinions that interest rates may be cut at the next Monetary Policy Committee meeting. In this meeting, seven out of nine members voted to keep rates steady, while two members favored a 0.25 percentage point cut, the same as in the May meeting. Some members who voted to hold rates described the decision as "carefully balanced."
According to a survey conducted last week by major foreign media targeting economic experts, expectations for a rate cut at the next committee meeting were the most prevalent. The next Monetary Policy Committee meeting will be held on August 1.
On the day, the British pound fell 0.26% from the previous day to $1.2685 per pound.
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