The Bank of England holds interest rates steady in June

The Bank of England (BoE) held its benchmark interest rate at 4.25% during its June policy meeting, in line with market expectations. The central bank emphasized it is closely monitoring risks tied to a weakening labor market and rising energy prices amid escalating geopolitical tensions in the Middle East.

The Monetary Policy Committee (MPC) voted 6–3 to keep rates unchanged. The decision follows a rate cut in May—the BoE’s fourth since August 2024. The three members who supported another cut cited slowing wage growth and unemployment reaching a four-year high as justification for additional easing.

Governor Andrew Bailey reiterated that while rates are on a downward path, the pace and timing of future moves remain uncertain. He pointed to increasing signs of labor market softness and noted that policymakers would assess how these trends could influence inflation dynamics.

Although the Middle East tensions were not a decisive factor in the June meeting, the BoE acknowledged the situation, stating that it will remain alert to any economic fallout from rising energy costs.

The central bank maintained its cautious guidance, signaling that further rate reductions will be gradual and data-dependent. Most economists expect the next cut in August, with a possible follow-up move in the final quarter of 2025.