The BoE decided to raise the key interest rate (Bank Rate) by 25 bps. With this 14th step in the current rate hike process, Bank Rate rises to 5.25%, the highest level since March 2008.

The BoE continues to expect inflation to fall significantly in the medium term, to 5% by the end of the year. Inflation is not expected to fall to the bank's 2% target until mid-2025.

After around 5 percentage points of rate hikes, the BoE now sees monetary policy as restrictive. This indicates that the BoE probably considers the rate peak not to be too far away, especially since the BoE's updated projections indicate weaker growth compared with the May projection and a weakening of the labor market from mid-2024. 

We expect a further and final rate hike in September; the rate peak should then be reached at 5.50%.