The Bank of England has held interest rates for the fifth time, at 5.25%.
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet a 2% inflation target, which is expected to be achieved temporarily in Q2 of 2024. At its meeting ending on 20 March 2024, the MPC voted by a majority of 8–1 to maintain Bank Rate at 5.25%.
One member preferred to reduce Bank Rate by 0.25 percentage points, to 5%.
Anna Leach, CBI Deputy Chief Economist, said: “The Bank of England has as expected chosen to keep interest rates on hold for the fifth occasion, following February’s inflation number which came in at its lowest since 2021.
“Nonetheless, services inflation, though falling in line with expectations, remains relatively high at 6.1%. And wage inflation, while likewise having fallen back is still running too hot to sustainably deliver 2% inflation, with risks that the forthcoming rise in the national living wage may yet spur renewed wage pressures.
“The CBI’s own surveys have shown the downward trend in price expectations stall across much of the private sector recently, amidst a renewed uptick in cost pressures. And the ongoing conflicts in the Middle East and Ukraine present further risks to the inflation outlook.
“Unsurprisingly therefore the Bank has reiterated that they’re looking for further evidence of sustained declines in domestic inflationary measures in particular in the coming months before they’ll consider dropping rates, with markets expecting the first downward move to come in June.”
