The Bank of England (BOE) kept its key interest rate unchanged on Thursday, as expected by markets.
BOE kept its prime rate is 5.25%, the seventh consecutive high since February 2008. The British central bank increased the interest rate 14 times from December 2021 to August 2023.
Two members of the Bank of England’s board voted to cut interest rates by 0.25 percentage points, compared to seven who favored the status quo.
In reaction to this announcement, the yield on the ten-year British sovereign bond fell 3 basis points to 4.07%. The London Stock Exchange accelerated its gains, gaining 0.37% shortly after 1 p.m.
Inflation in services
UK inflation has slowed sharply since spring 2023 after peaking at 11.1% year-on-year in October 2022. 2% for one year in May 2024 again fell to the central bank’s target level.
The May statistics highlighted continued price pressures in services, which bolstered the BOE’s status quo forecasts for Thursday’s rate cut. Inflation in this sector was 5.7% in May after 5.9% in April, and economists expected a more noticeable slowdown to 5.5%.