Business
The Bank of England (BoE) has decided to maintain the interest rate at 5.25% despite inflation reaching its target rate of 2%. This decision was made by a 7–2 majority at the Monetary Policy Committee (MPC) meeting that ended on June 19, 2024. Two members of the committee advocated reducing the Bank Rate by 0.25 percentage points to 5%.
One key reason for this decision is the uncertainty surrounding ONS Labour Force Survey estimates, which have made it difficult to accurately assess the labour market's evolution. Although a variety of indicators suggest that the labour market is loosening, it remains relatively tight compared to historical standards. In a previous article, we highlighted findings from the ONS survey, including indications that the unemployment rate had reached its highest level in over 2 years, alongside a drop in job vacancies. These factors have contributed to the BoE's cautious approach to keeping interest rates steady.
The next monetary policy meeting of the BoE is scheduled for August 1, 2024. This meeting will be particularly significant, as it will follow the conclusion of the general elections in July, and observers will closely monitor various economic indicators in anticipation of potential changes.
To access the full summary and minutes of BoE’s meeting, click here.
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