By Intense Life Desires 
The Bank of England
The Band of England’s Monetary Policy Committee (MPC) has voted by a majority of 6 – 3 to hold its base rate today at 4.25% in a widely expected move.
Three MPC members wanted to reduce the base rate by 0.25 percentage points to 4%.
The move holds the base rate at its lowest level for two years and follows a slight fall in CPI to 3.4% announced earlier this week.
In its predictions for the economy, the Bank said underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen, leading to clearer signs that a margin of slack has opened up over time.
Measures of pay growth have continued to moderate and, as in May, the Committee expects a significant slowing over the rest of the year. It also referred to ongoing global uncertainty and rising energy prices due to the escalation of the conflict in the Middle East.
The next base rate decision is expected on 7 August.
Jonny Black, chief client experience officer at Aberdeen Adviser, expected adviser demand to remain high despite the freezing of rates.
He said: “Today’s decision to hold interest rates is in line with market expectations. An increase in inflation is one of the key drivers of the decision and it’s expected interest rates will stay higher for longer.
“Even though nothing has changed, consumers need to reassess their financial plans – whether that’s revisiting the balance of cash or non-cash assets held, checking current strategies still support financial goals amid economic and market volatility, or speaking to a financial adviser who can help make sure their money is working as hard as it possibly can.”
Adam Ruddle, chief investment officer at LV=, said he expects the Bank to resume rate cutting in the coming months.
He said: “The Bank will be balancing a weakened economy with falling employment against headline inflation remaining above the Bank’s 2% target at 3.4%. Given the escalation in the Middle East, the Bank will be carefully monitoring the long-term impact on oil prices which could increase the risks of stagflation where inflation returns amidst a weak economy. At this time, we still expect the Bank to resume their rate cutting over the summer– though many will wish they had not waited.”
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