Bank of England upholds interest rates amid moderate inflation
(MENAFN) In a widely anticipated move, the bank of England opted to keep its benchmark interest rates unchanged for the sixth consecutive time, holding steady at 5.25 percent. The decision, consistent with market expectations, was announced on Thursday following a meeting of the Bank of England's Monetary Policy Committee. The vote to maintain interest rates saw a majority of 7 to 2, as indicated in the statement released by the central bank.
The Bank of England has steadfastly maintained high interest rates over the past few months, aiming to rein in inflation and bring it down to the targeted level of 2 percent. Although the annual inflation rate in the United Kingdom showed a moderation in March, slowing to 3.2 percent, its lowest level in approximately two and a half years, there is an expectation that the central bank may initiate interest rate cuts in the coming months.
Inflation in the UK had surged to over 11 percent towards the end of 2022, primarily driven by the repercussions of the Russian-Ukrainian war, which led to substantial spikes in energy costs. However, the recent easing in inflationary pressures has prompted speculation that the Bank of England might adopt a more accommodative monetary policy stance in response.
Market sentiment suggests growing anticipation for interest rate cuts to be implemented at the onset of summer, with expectations pointing towards a 25 basis point reduction in August and a cumulative 50 basis points cut over the course of the year. This outlook reflects market participants' assessments of the evolving economic landscape and their anticipation of policy responses aimed at fostering economic stability and addressing inflationary dynamics in the United Kingdom.
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