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The Bank of England has held interest rates at 4.25 per cent, in a widely expected decision after new data this week showed UK inflation remained stubbornly above its target.
The Monetary Policy Committee’s decision followed a quarter-point cut by the BoE in May amid concerns over the impact of US President Donald Trump’s aggressive tariff policy.
“Interest rates remain on a gradual downward path, although we’ve left them on hold today,” said Andrew Bailey, the BoE’s governor.
“The world is highly unpredictable,” Bailey added. “In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation.”
Deputy governor Dave Ramsden joined external members Swati Dhingra and Alan Taylor in calling for an immediate further cut in rates to 4 per cent.
Thursday’s announcement came as policymakers face the additional uncertainty posed by the escalating conflict between Israel and Iran, and its potential impact on oil prices.
Earlier this week, data from the Office for National Statistics showed UK inflation for May at 3.4 per cent, well above the BoE’s 2 per cent target.
The pound was largely unmoved against the dollar at $1.341 after the decision.
This is a developing story
