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• The FTSE 100 and FTSE 250 rose after the latest BoE interest rate decision.
• The committee voted unanimously to leave interest rates unchanged.
• The bank expects inflation to fall gradually and then resume the uptrend later this year.

The Bank of England (BoE) concluded its two-day monetary policy meeting and did what most analysts were expecting. Like the Federal Reserve, the bank decided to leave interest rates unchanged at a 16-year high of 16 years. 

The committee has left rates at this level in the past four meetings as it observes trends in inflation and economic growth. 6 members voted to leave the rate unchanged while 2 of them voted to hike it again by 0.25%. One member voted to cut rates. The FTSE 100 and FTSE 250 indices rose slightly after the BoE rate decision while the GBP/USD declined to 1.2640. The EUR/GBP wavered at 0.8550 after the report.

In its statement, the bank noted that it will continue to monitor the trends in inflation and economic growth before deciding to cut rates. Most analysts are expecting at least three cuts later this year as the bank tries to boost an economy that is struggling. The statement said:

 

“Conditioned on the alternative assumption of constant interest rates at 5.25%, the path for CPI inflation is significantly lower than in the Committee’s modal projection conditioned on the declining path of market rates, falling below the 2% target from 2025 Q4 onwards.”

The BoE statement came a day after the Federal Reserve delivered a hawkish pause. In its decision, the bank left interest rates unchanged between 5.25% and 5.50%. It also ruled against cutting rates in March as some analysts were expecting. Expectations are that the Fed will start cutting rates in June this year.

The UK is in a more difficult situation than the US. For one, economists, including the IMF, believe that it will be the second slowest economy in the G7 after Germany. Further, high interest rates have hurt consumers and businesses, leading to the biggest jump in bankruptcies in decades. Also, the FTSE 100 and FTSE 250 indices have trailed their global peers like the S&P 500 and Nasdaq 100.

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