The Bank of England raised interest rates to 4% on Thursday as it assessed inflation dynamics, with policymakers monitoring the extent of inflation pass-through. It framed inflation risks as tilted to the upside, leaving scope for that balance to shift as incoming data shape the outlook.
Inflation Target and Policy Outlook
Next steps were linked to the pace at which inflation moves lower towards the BoE’s 2% target. Developments around the US-Iran conflict were described as offering only limited relief for inflation pressures, while the energy price cap was cited as a factor keeping inflation baked in.
