The Bank of England has elected to hold its benchmark interest rate at current levels and stressed that future decisions will be data dependent.
In announcing its decision to keep its key Bank Rate at 5.25%, the British central bank said that an interest rate cut in June of this year is not guaranteed.
The Bank of England also cautioned that inflation risks remain elevated, noting that services inflation came in at 6% in March, and that there are continued geopolitical risks as well.
Two inflation reports are expected before the central bank’s next meeting on June 20 and both will be scrutinized, said officials.
Markets are anticipating interest rate cuts to begin this summer, with futures traders fully pricing in a 25-basis point reduction in August and 50-basis points for all of this year.
Headline inflation across the United Kingdom is forecast to drop in April due to lower energy prices, falling from the current rate of 3.2% to below the 2% target of the central bank.
The Bank of England said that it expects the U.K. economy expanded by 0.4% in the first quarter of this year and will likely grow a further 0.2% in the current second quarter.
The central bank added that it sees headline inflation falling close to 2% in the near-term.
