United Kingdom: Central Bank leaves rates unchanged in June
Latest bank decision: On 19 June, the Central Bank voted to leave the Bank Rate at 4.25%.
Monetary policy drivers: The Bank likely decided to pause its easing cycle—which has seen rates cut by 100 basis points since mid-2024—due to inflation above the Central Bank’s 2.0% target and the desire to assess elevated uncertainty in the global economy and geopolitics.
More cuts to come: The Central Bank reiterated that future rate cuts would be “gradual and careful”. Our Consensus is currently for around 50 basis points of extra cuts between now and end-2025, with forecasts ranging from zero to 150 basis points.
Panelist insight: On the outlook, ING analysts said:
“Despite weaker jobs numbers, the Bank of England is showing little sign that it’s about to pick up the pace of easing. We expect cuts in August and November. EUR/GBP upside risks are set to persist in the short and medium term.”
In contrast, Berenberg’s Andrew Wishart said:
“We expect cost-push inflation to force the BoE to keep bank rate at 4.25% until the end of the year. Healthy household finances, increasing real incomes and rising government expenditures will ensure that domestic spending growth remains robust so that companies can pass on the large increase in their costs to customers in the form of higher prices.”