The Bank of England’s Monetary Policy Committee (MPC) has voted today by a 7-2 majority to hold the Bank of England base rate at 3.75%.
The decision to keep the base rate at the same level as the past three reviews was widely expected by industry experts.
Two members of the MPC voted to increase Bank Rate by 0.25 percentage points, to 4%. In the last review in April only one MPC member voted for a 0.25 percentage point increase.
The MPC said that while global energy prices have fallen since the previous meeting they remained higher than pre-conflict times and have continued to be volatile. It added that the impact of the energy shock on the UK economy remains "uncertain."
The MPC also said in its statement on the base rate that while CPI inflation has fallen to 2.8% since the previous meeting, it is expected to rise later this year as the effects of higher energy prices continue to pass through the economy.
The risk of material second-round effects in price and wage-setting is "greater the longer higher energy prices persist," the MPC said.
The labour market continues to loosen, according to the MPC, and there are signs of a weakening economy that could bring inflationary pressures.
The Committee says it will continue to closely monitor the situation in the Middle East and impact throughout the economy.
The Committee said it "stands ready" to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.
CPI inflation held steady at 2.8%, in figures announced earlier this week. But while inflation pressures have subsided, at least temporarily, the CPI rate of 2.8% remains well above the bank's 2% target.
With an outline agreement in place on the Middle East conflict, the price of Brent Crude has slumped from a peak of $126 a barrel in April to under $80 today.
At its last meeting in April, the MPC voted by a majority of 8–1 to maintain the Bank Rate at 3.75%. One member voted to increase Bank Rate by 0.25 percentage points, to 4%.
The next base rate decision will be on 30 July.