Base rate stays unchanged as policymakers weigh concerns about inflation, Trump tariffs and Israel-Iran conflict
The Bank of England has left interest rates on hold at 4.25% as it awaits further evidence that inflation is under control before cutting borrowing costs further.
The Bank’s nine-member monetary policy committee (MPC) is taking what it calls a “gradual and careful” approach to reducing rates, making four quarter-point cuts since last August.
The MPC expects inflation to rise temporarily in the coming months as a result of higher energy prices, and then to fall back later in 2025, as wage growth weakens.
But the Bank’s governor, Andrew Bailey, has warned that Donald Trump’s tariff war makes the outlook for inflation and interest rates more ambiguous, telling MPs this month: “The path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty, frankly.”
