The Bank of England has kept interest rates at 3.75% for the fourth time in a row, as widely expected by economists.
Yesterday’s consumer price index (CPI) for May was lower than expected and unchanged from April at 2.8%, giving the Bank’s rate-setting committee room to keep the base rate on hold for a fourth consecutive meeting.
While inflation remains above the 2% target, it is not as high as forecast given the impact of the war in the Middle East on oil prices.
At the last meeting, members of the Monetary Policy Committee (MPC) voted 8-1 in favor of freezing the base rate.
However, the minutes of the meeting hinted that the committee could try to raise interest rates this year in an effort to curb inflation caused by the “significant shock to energy prices” caused by the war.
Before the attacks on Iran in late February, the Bank of England was expected to cut rates by at least 25 basis points around this time of year.