Although the MPC voted 7-2 to keep UK interest rates at 5.25%, the vote’s outcome may be interpreted as another evidence that rates may be dropping shortly, possibly as early as next month.
The Bank released updated estimates for the UK economy along with its rate decision, indicating that GDP will grow this year and that rates of unemployment and inflation will be lower than anticipated.
It predicted that the CPI inflation rate would soon fall to its objective of 2%, however it would then rise somewhat.
Governor Andrew Bailey stated: “Inflation has shown signs of improvement, and we anticipate that it will approach our 2% target in the coming months.” Before we lower interest rates, we need additional proof that inflation will remain low.
