The Bank of England building in London
The Bank of England (BoE) left its interest rate unchanged for the sixth consecutive time on Thursday, with its governor, Andrew Bailey, expressing confidence in the trajectory of inflation, a confidence reflected in new economic projections published in this occasion.
The main key rate is thus maintained at 5.25%, its highest level in 15 years.
The BoE’s monetary policy committee voted by 7 votes in favor of maintaining rates compared to 2 votes in favor of lowering rates to 5%.
“We need more evidence that inflation will remain low before we can cut rates. I am confident that things are moving in the right direction,” Andrew Bailey was quoted as saying in the BoE statement.
The central bank added a line to its monetary policy statement specifying that the institution will closely monitor future data releases “to understand whether the risks of persistent inflation are diminishing.”
“On this basis, the Monetary Policy Committee will decide how long rates should be maintained at their current levels,” summarizes the central bank.
SCREENINGS
In its updated economic projections, the BoE forecasts a decline in inflation to 2.6% in a year, compared to 2.8% projected in February.
In two years, inflation would fall to 1.9%, compared to 2.3% previously expected, and to 1.6% in three years, compared to 1.9% forecast in February.
Growth projections for the United Kingdom have been revised slightly upwards, to 0.5% in 2024 compared to 0.25% expected in February.
This new data will encourage operators to bet on future rate cuts from the BoE, with money markets estimating around 50% the probability that the institution will ease its policy during its next meeting in June.
The central bank will comment on its decision during a press conference starting at 11:30 GMT.
The BoE raised rates 14 times from December 2021 until August 2023, before opting for a first pause in September.
(Written by William Schomberg, edited by Corentin Chappron, edited by Tangi Salaün)
