Bank of England (BoE) Governor Andrew Bailey is addressing a press conference and responding to media questions, explaining the reasons behind the central bank’s decision to hold the benchmark policy rate at 3.75% in an 8-1 vote split following the April monetary policy meeting.
Key takeaways from Bailey’s Press Conference
Monetary policy cannot prevent higher global energy prices from affecting uk economy and inflation.
Where we go from here will depend on size and duration of shock to energy prices.
We now project inflation will rise to a little over 3.5% by end of year.
Initial indirect effects of inflation are likely to be largest for food prices.
The longer the conflict in Middle East lasts, the worse the impact will become.
Size of second round effects is uncertain and will take time to build.
Monetary policy faces a difficult judgement call as cannot wait for conclusive evidence on 2nd round effects.
Under scenarios A and B, necessary interest rate response is largely achieved by not cutting rates as was expected in Feb and without further rate increase.
Prolonged spike in energy prices could lead to higher Bank Rate.
There is a good deal of space available to accommodate inflation pressures by not cutting rates as had been previously expected.
Sheer volatility of energy prices makes it impossible to put probabilities on different scenarios.
It would be a mistake to wait for second round effects before acting, that would be too late.
It will take time before we get a good read on pay as most annual settlements have already been agreed.
I think energy price profile of scenario B is more plausible than scenario A.
We do not hear that rapid return to pre-conflict energy supply conditions is likely
It is an active hold today, not a passive one.
Developing story, please refresh the page for updates.
This section below was published at 11:00 GMT to cover the Bank of England’s policy announcements and the initial market reaction.
The Bank of England (BoE) announced on Thursday that it left the benchmark policy rate unchanged at 3.75%, as widely expected, following the conclusion of the April monetary policy meeting.
The vote showed the expected split on the Monetary Policy Committee (MPC), with one member favoring a 25-basis point (bps) rate hike.
Takeaways from BoE Monetary Policy Summary
BoE Chief Economist Huw Pill voted to increase rates by 0.25 percentage points
Bailey says “reasonable” to hold rates at 3.75% given uk economic situation and uncertainty in Middle East.
CPI likely to be higher this year as effect of higher energy prices passes through.
Bailey says our job is to make sure that inflation gets back to 2% after initial impact of war on energy prices has passed.
BoE says there is a risk of material second-round effects from inflation on wage- and price-setting, policy would need to lean against this.
BoE says weaker economy and labour market and tighter financial conditions will help reduce inflation over time.
BoE Monetary Policy Report highlights
BoE has not updated central economic forecasts, gives new forecasts based on three scenarios for energy prices and inflation persistence.
BoE forecasts 2026 CPI averaging 3.3%-4.5% under different scenarios (Feb central projection: 2.2%).
BoE forecasts 2027 CPI averaging 2.6%-4.8% under different scenarios (Feb central projection: 1.9%).
BoE forecasts 2028 CPI averaging 1.5%-2.9% under different scenarios (Feb central projection: 2.0%).
BoE forecasts for 2027 GDP growth 0.8%-1.0% under different scenarios (Feb central projection 1.5%).
BoE forecasts for 2026 GDP growth 0.7%-0.8% under different scenarios (Feb central projection 0.9%).
BoE says most inflationary scenario “was likely to warrant a forceful tightening of monetary policy”.
BoE projections show inflation peaking at 6.2% in Q1 2027 under most inflationary scenario if rates only rise as markets expect.
Market reaction to BoE policy announcements
The Pound Sterling shows little reaction to the BoE policy announcements, with GBP/USD up 0.34% on the day at 1.3515, as of writing.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.24% | -0.31% | -1.90% | -0.22% | -0.52% | -0.59% | -0.69% | |
| EUR | 0.24% | -0.03% | -1.68% | 0.02% | -0.27% | -0.32% | -0.42% | |
| GBP | 0.31% | 0.03% | -1.66% | 0.06% | -0.22% | -0.27% | -0.39% | |
| JPY | 1.90% | 1.68% | 1.66% | 1.70% | 1.41% | 1.29% | 1.20% | |
| CAD | 0.22% | -0.02% | -0.06% | -1.70% | -0.31% | -0.39% | -0.48% | |
| AUD | 0.52% | 0.27% | 0.22% | -1.41% | 0.31% | -0.05% | -0.15% | |
| NZD | 0.59% | 0.32% | 0.27% | -1.29% | 0.39% | 0.05% | -0.10% | |
| CHF | 0.69% | 0.42% | 0.39% | -1.20% | 0.48% | 0.15% | 0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
