Last Thursday, June 20, the Bank of England, during its regular meeting, decided to keep interest rates at 5.25%.
The financial regulator of the United Kingdom described the mentioned decision as finely balanced. It is worth noting that the June meeting of the Bank of England, during which the possibility of making changes to the monetary policy strategy was discussed, took place after data were published indicating that inflation in the UK had reached the target of 2%.
Investors perceived the decision of the financial regulator of the United Kingdom as subtly dovish messaging. On the money market, the probability that the Bank of England will lower the cost of borrowing in August is currently estimated at 50%.
Nowadays, the level of interest rates in the United Kingdom corresponds to a 16-year high. It is worth noting that this indicator has been maintained since August last year.
Seven members of the Monetary Policy Committee voted to keep the cost of borrowing at the current level, while two said that from their point of view, cutting interest rates is a preferable solution. It is worth noting that at the May meeting of the Bank of England, the ratio of opinions was about the same.
The Monetary Policy Committee has released a statement noting that inflation has reached the target level of the financial regulator of the United Kingdom. Special attention was also drawn to the fact that indicators of short-term inflation expectations and wage growth have eased.
Currently, the Bank of England adheres to the strategy of activity, according to which monetary policy should remain restrictive for a long period to steadily return inflation to the target of 2%.
