Bank of England held Bank Rate at 3.75% for a fourth consecutive meeting; the
Monetary Policy Committee voted 7-2 to maintain rates, with Chief Economist Pill
and member Green voting for a 25bp hike. The BoE said it stands ready to take
necessary action to ensure inflation returns to 2%; Governor Bailey said the
The bank would respond quickly to stronger signs of second‑round effects. Staff
project Q3 CPI just under 3% and Q4 slightly above 3.25%, both below April
forecasts; estimated potential GDP growth in Q2 is ~0.2% (April: 0.1%). The bank
flagged continued uncertainty from energy shocks and said longer‑lasting higher
energy prices increase the risk of significant price‑wage second‑round effects.
Market reaction: markets still price roughly 35bp of further hikes this year;
sterling dipped, EUR/GBP hit a three‑week high and gilt yields rose.
