▲ Bank of England (BOE)
The Bank of England (BOE), the United Kingdom's central bank, held its Monetary Policy Committee meeting on June 18 (local time) and decided to maintain its benchmark interest rate at 3.75% per annum.
Out of the nine members of the Monetary Policy Committee, seven voted to keep the rate unchanged, while two members proposed a 0.25 percentage point hike to 4%.
Market experts surveyed by Bloomberg and Reuters had previously anticipated this outcome, predicting that seven members would support a freeze and two would favor an increase.
Following its last rate cut of 0.25 percentage points in December of last year, the Bank of England has now kept interest rates steady for four consecutive meetings this year.
Although the U.K.'s consumer price index (CPI) growth rate slowed to 2.8% in late last month—after the previous policy meeting—the committee still opted for a freeze.
Despite a decline in international oil prices following the signing of a memorandum of understanding between the U.S. and Iran and the promise to reopen the Strait of Hormuz, the Bank of England pointed out that it is premature to conclude that inflationary risks have ended.
The Monetary Policy Committee explained, "While the CPI inflation rate fell to 2.8% since the previous meeting, the impact of rising energy prices continues, and further increases are expected this year." The committee added, "As the rise in energy prices persists, the risk of significant second-round effects on price and wage setting, to which policy must be linked, also increases."
The committee emphasized, "Members agreed that, given the uncertainties surrounding how the outlook will unfold, the appropriate policy response must be robust across a range of scenarios," and added, "The committee will continue to closely monitor the situation in the Middle East and its impact on the economy."
Bank of England Governor Andrew Bailey also stated, "While the recent decline in oil prices over the past few days is encouraging, they remain higher than before the war." He added, "The situation remains unpredictable, and there is a clear risk that energy prices will remain high for a considerable period."
Governor Bailey noted, "Whatever happens from here, the energy price increases that have occurred over the past four months mean that there is already some inflationary pressure in the pipeline."
The Bank of England projects that the inflation rate will rise to 3.25% in the fourth quarter of this year.
While this remains higher than the bank's long-term inflation target of 2%, it is lower than the 3.6% forecast made in April.
The British pound fell 0.5% from the previous session to $1.323 per pound, while the yield on 10-year government bonds rose by 0.02 percentage points to 4.78%.
The interest rate futures market has priced in a 0.25 percentage point rate hike within the year.
Previously, the European Central Bank raised its three key policy rates by 0.25 percentage points each on the 11th, and the Bank of Japan raised its policy rate from "around 0.75% per annum" to "around 1.0%" on the 16th.
The U.S. Federal Reserve held its benchmark interest rate steady at 3.50–3.75% on the 17th, but signaled the possibility of a rate hike within the year.
(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.