Ekonomické zprávy

BoE remains its Bank Rate unchanged at 5.25%, as widely anticipated

The Bank of England (BoE) announced on Thursday its Monetary Policy Committee (MPC) voted by a majority of 8-1 to remain the Bank Rate unchanged at 5.25 per cent at its March meeting. Meanwhile, one MPC member preferred to cut the Bank Rate by 25 basis points. The outcome was in line with investors’ expectations.

In its policy statement, the BoE notes:

- UK GDP and market sector output are expected to start growing again during H1;

- Business surveys remain consistent with an improving outlook for activity;

- UK labour market has continued to loosen but remains relatively tight by historical standards;

- Although still elevated, nominal wage growth has moderated across a number of measures;

- Services consumer price inflation has declined but remains elevated, at 6.1% in February;

- Most indicators of short-term inflation expectations have continued to ease;

- CPI inflation is projected to fall to slightly below the 2% target in 2024 Q2, marginally weaker than previously expected;

- Services price inflation is expected to fall back gradually;

- Restrictive stance of monetary policy is weighing on activity in the real economy, is leading to a looser labour market and is bearing down on inflationary pressures. Nonetheless, key indicators of inflation persistence remain elevated;

- Monetary policy will need to remain restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term in line with MPC’s remit;

- MPC has judged since last autumn that monetary policy needs to be restrictive for an extended period of time until the risk of inflation becoming embedded above the 2% target dissipates;

- MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably;

- MPC will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation;

- MPC will keep under review for how long Bank Rate should be maintained at its current level

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