Bank of England Holds Interest Rate at 4.25% Amid High Inflation
By Wafric - Business
Wafric News – June 19, 2025
London – The Bank of England (BoE) has decided to hold its benchmark interest rate at 4.25%, citing continued inflationary pressures and mounting global uncertainties. The move, widely anticipated by financial analysts, comes as the UK battles stubbornly high inflation and navigates risks from escalating geopolitical tensions.
In a press briefing on Thursday, BoE Governor Andrew Bailey signaled that although a rate cut is not happening just yet, it remains firmly on the horizon.
“Interest rates remain on a gradual downward path, although we’ve left them on hold today,” Bailey stated, warning that “the world is highly unpredictable.”
The decision comes hot on the heels of the US Federal Reserve’s announcement to keep rates unchanged, amid similar concerns of sticky inflation and sluggish growth in the global economy.
UK inflation data released Wednesday showed prices easing to 3.4% in May—slightly less than expected and still well above the Bank's official 2% target. The bank’s monetary policy committee pointed to a surge in energy prices, largely attributed to renewed conflict in the Middle East, particularly tensions between Israel and Iran.
While holding steady for now, analysts believe the BoE may pivot in its next policy meeting.
“The Bank of England opens the door for a cut in August as it keeps one eye on energy prices,” said Yael Selfin, Chief Economist at KPMG UK.
The UK economy continues to tread cautiously, with minimal growth and households feeling the pinch from elevated living costs. The BoE’s cautious stance reflects a balancing act between anchoring inflation expectations and avoiding further economic slowdown.
As the global financial landscape remains volatile—from tariff moves by the U.S. to security tensions in the Middle East—the Bank of England appears poised to act, but not just yet.
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