The decline in U.K. bond yields and the British pound on Thursday was driven by the Bank of England’s observation that two voters were in favour of an interest-rate cut.
In a decision that was supported by a majority of 7 to 2, the Bank of England chose to maintain interest rates at 5.25%.
Swati Dhingra, an external member, voted in favour of a cut last month. Dave Ramsden, the deputy governor for markets and banking, also voted for a reduction.
The decision led to a decline in gilt yields and the pound.
The 2-year BX:TMBMKGB-02Y experienced a slight decrease, falling to 4.29% from 4.32%. Similarly, the pound GBPUSD, 0.00% saw a decline, dropping to $1.2458 from $1.2497.
According to the Bank of England, CPI inflation is projected to approach the 2% target in the near future, but is expected to rise slightly to approximately 2.5% in the latter half of this year.
The Committee will analyse upcoming data releases and use them to assess whether the risks of inflation persistence are decreasing. The Committee will continue to assess the duration for which Bank Rate should be maintained at its current level,” it stated.
Bank of England Governor Andrew Bailey stated that even if the data aligns precisely with the central bank’s forecasts, a decision will still need to be made regarding the receding risks.
“June is not a done deal,” Bailey remarked.
Prior to the meeting, market expectations indicated the possibility of a rate cut in the near future, with a moderate likelihood of a reduction in the coming months.
See Also : Sweden’s bank is the second big one to lower rates.
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