Bank of England holds interest rates steady despite inflation easing to 2% target

Seven members of the Monetary Policy Committee voted to hold, while two favored to cut, the same as during the bank’s May meeting.

In a statement, the MPC noted inflation had reached the central bank’s target and said indicators of “short-term inflation expectations” and wage growth had eased.

It was “very difficult to gauge the evolution of labour market activity” because of uncertainty around estimates from the Office for National Statistics, the MPC added.

In a repeat of previous messaging that some analysts had thought it may drop, it again said monetary policy needs to “remain restrictive for sufficiently long to return inflation to the 2% target sustainably.”

Inflation data on Wednesday showed headline price rises cooled to 2% in May, meeting the central bank’s target ahead of the U.S. and the euro zone, despite the U.K. suffering a sharper spike inflation over the last two years.

However, economists say the U.K.’s continued high rates of services and core inflation suggest the potential for ongoing upward pressure.

Other central banks in Europe have begun to ease monetary policy, including the Swiss National Bank, European Central Bank and Sweden’s Riksbank, as they seek to reboot economic growth.

That’s even as the U.S. Federal Reserve, sometimes viewed as the central bank leader due to the U.S.’s outsize influence on the global economy, has left traders pondering when its first rate cut will come. Money market pricing suggests a 64% chance of a September cut, according to LSEG data.

This is a breaking news story and will be updated shortly.