Bank of England holds rate at 3.75% in 7-2 vote as inflation lingers
What's new: Two policymakers backed a hike to 4%, even as the bank cut its peak inflation forecast to 3.25% for late 2026.
The Bank of England kept its benchmark interest rate at 3.75% on Thursday, with seven policymakers voting to hold and two backing a quarter-point increase to 4%. The split underscored persistent concern about inflation even as the central bank trimmed its forecast for peak inflation this year to 3.25% from 3.6% projected in April.
The decision came as U.K. inflation remained at 2.8% in May, above the bank’s 2% target, while growth stayed weak. Official data showed the economy shrank 0.1% in April, and the bank pointed to softer demand and a gradually loosening labor market. Oil prices have eased after the U.S.-Iran truce, but Governor Andrew Bailey warned energy costs could stay elevated and keep pressure on prices.