The Bank of
England (BoE) announced on Thursday its Monetary Policy Committee (MPC) voted
by a majority of 8-1 to keep
the Bank Rate unchanged at 4.25 per cent
at its March meeting. Meanwhile, one MPC member preferred to cut the benchmark rate by 25 basis points. The latest rate decision was in line with investors' and
economists’ expectations.
In its policy statement,
the BoE notes:
- Global trade policy uncertainty has intensified since the
MPC’s previous meeting. Other geopolitical uncertainties have also increased;
-
UK GDP growth estimates have been slightly stronger than expected in February;
- Business survey indicators generally continue to suggest
weakness in growth and particularly in employment intentions;
-
12-month CPI inflation increased to 3.0% in January, slightly higher than
expected in February;
- Domestic price and wage pressures are moderating, but
remain somewhat elevated;
- CPI
inflation is still projected to rise to around 3.75% in 2025 Q3 and fall back
thereafter;
- MPC will pay close attention to any consequent signs of
more lasting inflationary pressures;
- Gradual and careful approach to the further withdrawal of
monetary policy restraint is appropriate;
-
Should there be greater or longer-lasting weakness in demand relative to
supply, this could push down on inflationary pressures, warranting a less
restrictive path of Bank Rate;
-
Should there be more constrained supply relative to demand and more persistence
in domestic wages and prices, this would warrant a relatively tighter monetary
policy path;
-
MPC will continue to monitor closely the risks of inflation persistence and
what the evidence may reveal about the balance between aggregate supply and
demand in the economy;
-
Monetary policy will need to continue to remain restrictive for sufficiently
long until the risks to inflation returning sustainably to the 2% target in the
medium term have dissipated further;
- MPC will decide the appropriate degree of monetary policy
restrictiveness at each meeting