Bank of England holds key rate at 3.75% as two policymakers vote for hike

According to CNBC, the Bank of England held its key interest rate at 3.75% on Thursday, a decision backed by seven of nine Monetary Policy Committee members and in line with economists’ expectations in a Reuters poll. Chief economist Huw Pill and external member Megan Greene dissented, voting to raise the base rate by 25 basis points to 4%. The central bank said higher energy costs linked to the Iran war have made price developments harder to predict, even as U.K. inflation held at a cooler-than-expected 2.8% in May and data showed the economy shrank 0.1% in April. It expects inflation to tick higher again as energy prices feed through to the broader economy, noting the regulated energy price cap is due to rise 13% later this summer. LSEG data showed markets still betting on a rate increase by year-end, while traders ahead of the meeting had priced a 96% chance of no change.