After the Fed also the Bank of England has announced a nothing done on interest rateswho remain stop at 4.25%without arousing any surprise in analysts, who expected a restrictive approach due to an “high -kingdom inflation still in the UK. In fact, the inflation in the UK remains well over 2%, not only far from the 2%target fixed by the central bank, but also well above the average levels of the euro area (at 1.9%).
In the last two years there was a disinflation process In the United Kingdom – explains the Statement – with the loss of external shocks and thanks to the restrictive orientation of monetary policy, which has attenuated the second level effects and stabilized the long -term inflation expectations. This allowed the MPC of gradually reduce monetary restrictionhowever, keeping the discount rate in restrictive territory, in order to continue to contain persistent inflationary pressures.
Decision made by majority
The monetary policy committee (MPC) in the meeting ended today 18 June 2025, voted with one majority of 6 to 3 the maintenance of a discount rate at 4.25%. Three members would have preferred to reduce the rate of 25 points 4%.
GDP and work market weaken
There GDP growth of the United Kingdom remained weak and the labor market has continued to weakenoffering clearer signals that, over time, has generated a certain margin of inactivity. The indicators of wage growth they continued to moderate themselves and, as in May, the committee provides for a slowdown significant for the rest of the year. The Committee remains alert to the extent that the loosening of the wage pressures will be reflected on inflation.
The Boe took note of the “progress in trade negotiations ” Between the United States, on the one hand, and the United Kingdom and China on the other, but believes that the future structure of the duties is characterized by high uncertain And this increases the risks for global trade.
Inflation remains too high
Inflation annual is climb to 3.4% in May from 2.6% of March, in line with the expectations contained in the report on May monetary policy. The increase is largely due to the prices of some regulated assets and the increases in energy prices. The Committee provides that inflation will remain on current levels for the rest of the yearbefore returning to the goal next year.
The prudent approach remains
Global uncertainty remains high. Energy prices increased due toEscalation of the conflict in the Middle East. For this reason, the Committee will continue to pay attention to the growing unpredictability of the economic and geopolitical context and will continue to update its risk assessment for the economy.
They still remain Risks in the two senses for inflation. The Committee will continue to monitor carefully the risks of persistence of inflation and what the data could reveal on the balance between the demand and demand aggregate in the economy.
For this reason the MPC judges “Appropriate” a gradual and cautious approach to the further loosening of monetary restrictions and confirms that monetary policy does not follow a predefined path. There monetary policy will have to continue remain restrictive For a sufficiently long period, until the risks of a sustainable return of inflation to the objective of 2% in the medium term will not have further dissipated. The Committee will decide The appropriate degree of restriction of monetary policy At each meeting.
