Thursday, the Bank of England decided to keep interest rates the same. This may be the last time they do this before inflation hits their goal.
The U.K. central bank kept rates at 5.25% by a vote of 7 to 2.
According to the report, “the tight monetary policy is slowing down the real economy, making the job market less tight, and putting pressure on inflation,” “The MPC’s job requires that monetary policy stay tight for a long enough time to bring inflation back to the 2% target in a way that can be sustained over the medium term.”
It did get back to 2% in May, but the rate of rise in services prices was higher than the central bank had thought.
The central bank said that the August forecast round would be a chance to look again at the assessment that the risks of inflation staying high are decreasing.
It went down from 4.19% on Wednesday to 4.15% on the 2-year gilt BX:TMBMKGB-02Y. The pound broke through the $1.27 mark.
The second rate cut of the cycle was made by the Swiss National Bank earlier on Thursday. In the beginning of the month, the European Central Bank lowered rate.
“The Bank will soon have to lower interest rates to keep up with inflation on the way down, just like it did when inflation was going up. This is to avoid a passive tightening of monetary policy.” It’s part of a larger trend that the Swiss National Bank lowered interest rates for a second time this morning. “We expect the BoE to join the cutting cycle when they meet in August,” said Dean Turner, chief eurozone and U.K. economist at UBS Global Wealth Management.
