The Bank of England decided to maintain the main interest rate at 4.25 percent with a vote of six members in favor of keeping the rate compared to three members who supported lowering the rate, at a time when indicators of weakness in the labor market and a slowdown in wage growth are increasing.
The bank affirmed in its statement issued today, Thursday, that the gradual and cautious approach to reducing monetary constraints remains appropriate at this stage, noting that monetary policy is not on a predetermined path but is subject to continuous assessment of economic data, with inflation and labor market developments at the forefront.
In his statements, Bank of England Governor Andrew Bailey noted that the labor market in the UK is witnessing a noticeable decline, which may open the door to taking additional steps towards lowering interest rates, should this weakness put pressure on inflation indicators, especially the consumer price index.
For its part, the Monetary Policy Committee clarified that wage growth is expected to slow significantly during the current year, reinforcing expectations of declining inflationary pressures.
Some members supporting the cut also indicated that wage agreements have become closer to sustainable rates, in addition to a decline in consumer demand within the British economy.
In terms of market movements, the British pound fell by 0.1 percent against the dollar to reach 1.34125 dollars, while the euro's exchange rate against the pound remained stable at 85.51 pence. The FTSE 100 index recorded a slight decline of about 0.2 percent, amid anticipation of potential future steps by the bank.
The decision to maintain rates comes amid ongoing challenges related to the slowdown in global growth, rising geopolitical risks, and continued uncertainty in trade policies, which continue to negatively affect the British economy.
The bank confirmed at the end of its statement that it will continue to monitor data and assess risks, and that it is ready to adjust monetary policy as circumstances require, while maintaining a delicate balance between supporting economic activity and controlling inflation.