The high inflation rate was one of the key considerations, although this week’s 3.4% figure was in line with the Bank’s projections.

The Bank’s monetary policy committee (MPC) voted by a majority of 6–3 to maintain interest rate at 4.25%. A minority of members wanted to cut the rate by a quarter of a point to 4%, similar to the last meeting. It is now three months since the last reduction.

With inflation running high, the Bank cannot meet its primary 2% inflation objective, and warned that ‘inflation was expected to remain broadly at current rates throughout the remainder of the year before falling back towards target next year’. 

Weak economic growth was a contributing factor and inflationary concerns, with the Bank noting: ‘Underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen’, adding it will remain ‘vigilant about the extent to which easing pay pressures will feed through to consumer price inflation’.

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