Bank of England Hold Rates As Inflation Concerns Remain

Bank of England Hold Rates As Inflation Concerns Remain

Thursday 24th June 2021 – 12:15 (BST)

The Bank of England has voted unanimously to keep UK interest rates at 0.1% whilst also holding its asset purchasing facility at £895bn for August. The central bank also stated it now expects consumer price inflation (CPI) to rise to 3% in the coming months, but also insisted it will then drop down towards its 2% target.

The pound immediately weakened following the news as pressure mounts for the BoE to take a more proactive stance to rising inflation. May’s CPI reading spiked from 1.5% to 2.1% – the first time it had surpassed the BoE’s 2% target since July 2019.

In what is his final meeting for the bank, chief economist Andy Haldane remains the only hawkish committee member and has repeatedly warned that inflation threatens to overheat he UK economy.

The recent market turbulence looks set to remain after the Federal Reserve signalled its intent to raise interest rates a year earlier than expected last week.

The US central banks top officials have gone some way to counter analysts concerns in recent days, with chair Jay Powell stating: “We will not raise interest rates pre-emptively because we think employment is too high [or] because we fear the possible onset of inflation”