Bank of England surprises the market by opting to leave rates unchanged
by Sara Sjolin
The Bank of England took markets by surprise on Thursday, making no change to interest rates in a decision analysts described as prudent and understandable, but at the same time as painting it into a corner.
The call to leave rates unchanged at 0.5% was largely unexpected by investors, as traders had priced in a more than 80% chance of a rate cut to a record low of 0.25%. That would have been the first change to interest rates in more than seven years.
However, the U.K. central bank heavily hinted a rate cut could happen on August 4, when it meets for both a policy-setting meeting and releases its quarterly inflation report.
“In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August,” the BOE said in its statement.