Bank of England keeps rates on hold in June

The Bank of England (BoE) held interest rates steady at 4.25% during its June policy meeting, as widely expected. The central bank emphasized it is closely watching risks stemming from a weakening labor market and rising energy prices amid escalating conflict in the Middle East.

The Monetary Policy Committee (MPC) voted 6–3 to keep rates on hold in June. This decision followed a rate cut last month—its fourth since August 2024. Policymakers who favored further easing pointed to weakening wage growth and unemployment reaching a four-year high to support their stance.

BoE Governor Andrew Bailey stated that while interest rates remain on a gradual downward path, the trajectory is not fixed. He noted the unpredictability of the global landscape and highlighted signs of softening in the UK labor market. Policymakers, he said, would carefully assess how these labor trends may impact consumer price inflation.

Although recent tensions in the Middle East were not central to June’s rate decision, the BoE acknowledged the situation and indicated that the MPC would remain vigilant about the potential economic impact of rising energy prices.

The central bank maintained its guidance, signaling a gradual and cautious approach to further rate cuts. Economists generally expect the next rate cut to come in August, with a possible additional reduction in the final quarter of 2025.