UOB Group’s Economist Lee Sue Ann comments on the latest interest rate decision by the Bank of England (BoE).

Key Takeaways

“The Bank of England (BOE)’s Monetary Policy Committee (MPC) voted by a majority of 7-2 to increase the Bank Rate by 25bps to 4.50%. Similar to Mar, the MPC, in its Monetary Policy Summary and Minutes, kept the statement, ‘If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required’.

“The MPC no longer expects the UK economy to enter recession this year and now expects GDP to grow by 0.25% in 2023 and by 0.75% in 2024. Inflation is expected to remain above 10%, before falling sharply over the coming months, driven largely by falling energy prices.”

“Whether the MPC will be comfortable with pausing by the time of the next meeting on 22 Jun will depend very much on incoming data and developments. However, we stick to our view that the BOE may pause as soon as next month.”