As it struggled with the profound uncertainty that loomed over the British and global economies, the Bank of England held interest rates steady and cautioned investors against expecting them to be slashed soon.
With only external member Swati Dhingra voting for a quarter-point reduction, the BoE’s rate-setters voted 8-1 to maintain borrowing costs at 4.5%. Reuters polled economists, who largely predicted a less decisive 7-2 “hold” vote.
Because inflation pressures were still a possibility, Bailey stated that the BoE would need to proceed cautiously with any upcoming rate decreases. Bailey informed broadcasters that we must “accumulate the evidence” of a decrease in price pressures. “It is imperative that we wait for that proof to surface.
Since last summer, the BoE has lowered borrowing costs less than the European Central Bank and the U.S. Federal Reserve, which has contributed to Britain’s slow economic development. In January, UK inflation touched 3%, well above its 2% target.
The Monetary Policy Committee will know whether Trump has followed through on his threat to impose fresh tariffs on a large number of U.S. imports when it makes its next rate decision on May 8.
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