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The Bank of England on Thursday pledged a gradual and careful approach to monetary policy as it left interest rates unchanged amid slowing growth and elevated inflation. At the conclusion of its two-day meeting, the BoE’s Monetary Policy Committee voted by a majority of 8 to 1 to maintain bank rate at 4.50%. Swati Dhingra preferred to a quarter point cut to 4.25%. A 7-2 vote split had been expected. The MPC said a ‘gradual and careful’ approach to the further withdrawal of monetary policy restraint is appropriate. ‘Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further,’ it added. ‘There was no presumption that monetary policy was on a pre-set path over the next few meetings,’ the MPC said. The MPC noted business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions, while domestic price and wage pressures remain somewhat elevated. It said risks around the near-term outlook for activity in a number of advanced economies, including the UK, remain to the downside. In addition the MPC pointed out that since its February meeting global trade policy uncertainty has intensified, citing US tariffs, while other geopolitical uncertainties have also increased. ‘This was a rapidly evolving situation, which it would monitor closely and assess further in the May policy round,’ the MPC said. In February, the MPC voted 7 to 2 for a quarter-point rate cut to 4.50% from 4.75%. All members of the MPC backed the reduction with two members Swati Dhingra, and previous ’hawk’ Catherine Mann, preferring a larger 50 basis points cut, which would have taken base rate to 4.25%. The pound was trading at $1.2971 shortly after the decision, higher compared with $1.2951 before. The FTSE 100 was 0.3% lower after the decision compared with down 0.1% before. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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