Bank of England keeps interest rates steady at 4.25%

From Morningstar: 2025-06-19 07:10:00

The Bank of England (BoE) has decided to hold interest rates at 4.25%, amidst uncertainty over tariffs, UK government policy, and Middle East conflict. Six members voted to maintain rates, while three members wanted a 0.25% cut. MPC members Dhingra and Taylor advocated for a 0.50% cut, while Ramsden favored a quarter-point cut.

BoE stated that global uncertainty remains high, with energy prices rising due to Middle East conflict. The Committee will monitor economic and geopolitical risks. Given the outlook and disinflation, a cautious approach to monetary policy remains appropriate. Monetary policy is not predetermined.

Following previous rate cuts in 2024 and 2025, the market reaction to BoE’s decision was subdued. Bond yields remained stable, with the 10-year gilt yield softening to around 4.51% post-announcement. Market expectations point to two more rate cuts in August and November, bringing the total cuts for 2025 to four.

The Bank of England has forecast an increase in inflation to 3.75% this year, supported by CPI data. In May, annual CPI inflation stood at 3.4%, above the 2% target. Regulated prices and energy costs contributed to the rise. Inflation is expected to remain elevated before easing towards the target next year.

Analysts are monitoring various factors influencing UK inflation, including Middle East conflict, rising oil prices, tariffs’ impact, and National Insurance contribution hikes. Despite inflationary pressures, financial markets anticipate two more rate cuts by the end of 2025. Investors may need to remain patient amidst market uncertainties and potential opportunities in certain sectors like energy. 1. The unemployment rate in the United States has dropped to 4.6%, the lowest since 1969. This is due to strong job growth in various sectors, with 531,000 new jobs added in October.

2. Scientists have discovered a new species of dinosaur in Argentina, named “Llukalkan aliocranianus.” This carnivorous dinosaur had a unique skull structure and roamed the Earth during the Late Cretaceous period.

3. The World Health Organization has approved the first malaria vaccine, RTS,S/AS01. This vaccine has shown to reduce severe cases of malaria in children by up to 30% and is expected to save thousands of lives in regions heavily affected by the disease.



Read more at Morningstar: Bank of England Holds Interest Rates