The Bank of England’s Monetary Policy Committee (MPC) has decided to hold its benchmark rate steady at 4.5%. This follows the US Federal Reserve’s decision not to change its rates.
The MPC voted 8 to 1, with one member preferring to cut rates by 25 basis points.
The MPC issued a statement noting progress on disinflation in the past two years as monetary policy has had its desired effect of stabilizing inflation expectations. At the same time, the Committee seeks to “squeeze out” remaining inflation pressures.
The MPC also noted that global trade uncertainty has risen as the US has made various Tarrif announcements. This, along with other geopolitical concerns, requires a cautious approach.
Twelve-month CPI inflation increased to 3.0% in January from 2.5% in December, slightly higher than expected in the February Report.
The MPC said inflation is expected to decline, but the Committee will pay close attention to any consequent signs of more lasting inflationary pressures.
Joey Garcia, Executive Director, Chief Digital Asset and Legal Officer at Xapo Bank, commented on the Bank’s decision not to change rates. Garcia said the decision will have implications for markets.
“The UK remains in a precarious position — Labour is balancing pre-election promises of growth against an underperforming economy, a chaotic global outlook, and a paired-down fiscal statement next week.”
Garcia added that Labour’s approach to emerging technology is clear, and investments in digital infrastructure and AI indicate where the UK’s future growth lies.
“As the lines between digital and traditional finance continue to blur, the country has the opportunity to create a regulatory and investment environment for digital assets to flourish. Between the FCA’s evolving crypto regulatory framework, the ongoing work to create a digital pound, and the continued integration of digital assets into mainstream finance, the UK must make the right decisions now to establish itself as a leader in the global digital asset race.”