The Bank of England (BOE) has decided to maintain its benchmark interest rate at 3.75%, continuing its cautious monetary policy stance.
On June 18, the BOE announced that it had frozen the interest rate during its monetary policy committee meeting. This marks the fourth consecutive month of holding rates steady since the last cut in December of the previous year.
In the vote, seven out of nine committee members supported the decision to keep rates unchanged.
Conversely, two members advocated for a 0.25 percentage point increase to 4.0%, aligning with market expectations.
Recently, the UK's consumer price index (CPI) inflation rate has decreased to 2.8%, indicating a slowdown in price increases. However, the central bank remains vigilant. Despite a drop in international oil prices following a memorandum of understanding between the U.S. and Iran and a promise to reopen the Strait of Hormuz, the BOE believes it is premature to conclude that inflation risks have been fully resolved.
The monetary policy committee explained, "The impact of rising energy prices continues, and there is a significant risk that this could lead to a resurgence in inflation this year, affecting wages and overall price setting."
Andrew Bailey, Governor of the Bank of England, noted, "While the recent decline in oil prices is encouraging, they remain elevated compared to pre-conflict levels. It is difficult to predict the situation, and there is a clear risk that energy prices will remain high for an extended period." He added that the energy price increases over the past four months have already contributed to inflationary pressures.
The BOE forecasts that inflation will reach 3.25% in the fourth quarter of this year. This figure is lower than the previous estimate of 3.6% made in April but still exceeds the bank's long-term target of 2%.
Following the announcement of the rate freeze, the value of the pound fell by 0.5% to $1.323. The yield on 10-year government bonds rose slightly to 4.78%, an increase of 0.02 percentage points.
* This article has been translated by AI.
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