Bank of England base rate hold: Hymans Robertson reacts

Commenting on the base rate hold announced today by the Bank of England, Chris Arcari, Head of Capital Markets, Hymans Robertson, says:

“Inflation eased in May, but much of this reflects an adjustment to prior figures and underlying inflation pressures remain high. Both headline and core CPI, which excludes volatile energy and food prices, are running above target at 3.4% and 4.2%, respectively. And, with energy prices expected to drive inflation higher in 2025, the Bank of England were expected to hold rates at today’s meeting.

“Nonetheless, the Bank of England believes interest rates, at 4.25% p.a., to be slightly restrictive and the market is still pricing in almost two 0.25% p.a. rate cuts before the end of the year. With lingering inflation pressures and rises in oil prices on the back of open conflict between Israel and Iran posing upside risks, and global growth expected to slow, as tariffs act as a tax on global consumption, we see the risks to market pricing as broadly balanced.”

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