Pound dips after Bank of England leaves key interest rate unchanged
2024.05.09 07:32
Investing.com — The Bank of England has left its key rate of interest unchanged at 5.25% as expected, as officials mull over whether signs of easing inflation in the U.K. give them room to vote in favor of ratcheting down borrowing costs.
Prior to the meeting of the central bank’s Monetary Policy Committee, some policymakers, including BoE Governor Andrew Bailey, suggested that they could be gearing up to advocate for a downward move.
Undergirding this rhetoric was inflation in the U.K., which eased in March to 3.2% on a twelve-month basis — although this pace was faster than economists had initially anticipated. Year-on-year growth in the price of services also slowed.
At its May gathering, the MPC voted 7-2 to maintain the rate at its current level. The two members in the minority preferred to reduce the bank rate by 25 basis points to 5%, the BoE said in a statement. In March, the MPC’s vote was 8-1.
In a statement, the BoE said that while monetary policy will need to “remain restrictive” to bring price growth back down to its 2% target, the elevated stance is “weighing on activity in the real economy, is leading to a looser labour market and is bearing down on inflationary pressures.”
“Key indicators of inflation persistence are moderating broadly,” it added.
