Following its March policy meeting, the Bank of England (BOE) announced that it raised the policy rate by 25 basis points (bps) to 4.25% as expected. Two policymakers, Tenreyro and Dhingra, vote to keep the policy rate on hold at 4%.

"If there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required," the BOE said in its policy statement.

Follow our live coverage of the BOE policy announcements and the market reaction.

Market reaction

GBP/USD is struggling to make a decisive move in either direction following the BOE's policy announcements. As of writing, the pair was trading modestly higher on the day at around 1.2300.

Key takeaways from the policy statement

"Staff forecast Q2 GDP to increase slightly (Feb forecast: -0.4%), Q1 GDP forecast unchanged at -0.1%."

"Q2 CPI likely to be lower than forecast in Feb, due to longer energy price cap and lower wholesale prices."

"CPI remains likely to fall sharply over remainder of 2023, despite upward surprise in Feb."

"Surprising strength in Feb core goods prices reflects volatile clothing prices, may not be persistent."

"UK banking system is well-placed to support economy, including in a period of higher interest rates."

"UK banking system maintains robust capital and liquidity, remains resilient."

"Will continue to monitor UK credit conditions closely."

"Fiscal support in March budget to increase GDP level by around 0.3% over coming years."

"Extended energy price guarantee to lower Q2 CPI by around 1 percentage point vs Feb forecast, other measures to lower CPI by around 0.33 percentage points."

"Wage growth likely to fall back somewhat faster than forecast in Feb due to lower inflation expectations."

"Staff expect 0.2% Q2 employment growth (Feb forecast: -0.4%), no rise in unemployment."

"Businesses see year-ahead inflation of 5.6% in 3 months to Feb vs 6.2% in 3 months to Nov."

"Businesses see year-ahead wage growth of 5.7% in Feb vs 5.8% in Nov."