Bank Rate Frozen at 4.25% in UK… "Impact of Geopolitical Shifts"

The UK's central bank, the Bank of England (BOE), has kept its base rate unchanged.

On the 19th (local time), the Bank of England held a Monetary Policy Committee meeting and decided to maintain the base rate at 4.25% per annum. Of the nine members of the Monetary Policy Committee, six voted in favor of maintaining the rate. The remaining three members supported a 0.25 percentage point cut.

Andrew Bailey, Governor of the Bank of England, stated, "Rates are gradually maintaining a downward trajectory." This implies the possibility of a rate cut at the next Monetary Policy Committee meeting. The next committee meeting of the Bank of England will be held on August 7.

Analysts say the decision to freeze rates was influenced by the Iran-Israel war. The Bank of England also said, "Ahead of this meeting, there were rapidly evolving geopolitical developments," and "Energy prices have risen due to intensified conflict in the Middle East." The Bank further added, "The committee will continue to respond sensitively to heightened unpredictability in the economic and geopolitical environment and will update risk assessments for the economy accordingly."

The Bank of England adjusts the base rate with a target inflation rate of 2% per annum. Last month, the UK's consumer price inflation was 3.4%, significantly exceeding the target.

The market expects the Bank of England to implement two further base rate cuts within the year. If market forecasts are correct, the UK's base rate will fall to 3.75% by the end of the year.