The Bank of England (BoE) held its benchmark interest rate at a 16-year high at the conclusion of its policy meeting. The UK central bank did, however, signal that it will soon follow its European counterparts in lowering interest rates.
At its sixth consecutive policymakers’ meeting on Thursday, the BoE maintained its benchmark rate at 5.25%, as anticipated by markets and analysts. However, a recent decision by two of its Monetary Policy Committee’s nine members to cut the key rate to 5% indicates that action is drawing closer.
Before beginning interest rate decreases, the BoE may need to wait for more indications of softening in labor market statistics and U.K. inflation, according to analysts at Monex Europe.
“While the BOE is set to receive two more sets of labor market and inflation data between now and the June meeting, in our view the bar is still high for these to build sufficient confidence for the MPC to cut rates,” they say.
If U.K.’s upcoming inflation and labor market data shows deceleration, the BOE could start cutting rates in June but Monex analysts lean in favor of the cuts starting in August.
