BoE holds interest rate at 4.25 pct amid inflation concerns, global uncertainty

LONDON -- The Bank of England (BoE) on Thursday decided to keep its benchmark interest rate unchanged at 4.25 percent, citing persistent inflation pressures and heightened global uncertainty.

At its June meeting, the central bank's Monetary Policy Committee (MPC) voted by a majority of 6 to 3 to maintain the current rate, following a 25-basis-point cut in May. Three members of the nine-person committee supported a further reduction to 4.0 percent.

In a statement, the BoE said inflation remains elevated, with the consumer price index (CPI) for May holding steady at 3.4 percent, well above the 2 percent target. The bank highlighted rising food and energy prices, as well as geopolitical tensions in the Middle East, as key factors affecting price stability.

BoE Governor Andrew Bailey noted that while economic activity remains subdued and the labor market is showing signs of weakening, the path for interest rates will remain "gradual and cautious."

He stressed that the BoE is not following a fixed schedule for rate cuts and will continue to assess data on inflation and growth.

According to analysts, markets expect the BoE to deliver at least two more rate cuts in 2025, potentially lowering the base rate to around 3.75 percent by year-end.

The BoE has raised interest rates aggressively since late 2021 in response to soaring inflation, which peaked at over 11 percent in late 2022.