One member dissented, calling for a 0.25 percentage point hike to 4 per cent. The MPC reiterated its symmetric 2 per cent inflation target, noting that short-term deviations are expected amid external shocks.
The Bank of England has held rates at 3.75 per cent in April with an 8–1 vote.
Inflation at 3.3 per cent may rise further due to energy shocks from Middle East tensions.
Labour markets are softening, with unemployment seen edging up.
The MPC expects subdued growth, rising uncertainty, and stands ready to act to keep inflation near the 2 per cent target.
Consumer price inflation has risen to 3.3 per cent and is likely to increase further this year as higher energy costs feed through the economy. It warned of potential second-round effects in wages and prices, though easing labour market conditions and tighter financial conditions could help contain inflation over time, the Bank of England said in its April Monetary Policy Report.
The ongoing Middle East conflict has added significant uncertainty to global energy prices. While monetary policy cannot directly influence such costs, the MPC said it will ensure that any economic adjustment remains consistent with returning inflation sustainably to target.
The report outlined three scenarios to reflect possible paths for the UK economy, depending on the scale and persistence of the energy shock and its transmission.
Labour market signals remain mixed. The unemployment rate fell to 4.9 per cent in the three months to February, driven by lower participation, while underlying employment was flat. Job vacancies declined by around 4 per cent in the first quarter, and redundancies remain elevated. The bank expects unemployment to edge up to 5.1 per cent in the second quarter, added the report.
Employment growth is projected to remain subdued, with firms expecting broadly flat headcount over the coming year. While the conflict has not yet materially affected hiring plans, uncertainty among businesses has risen slightly.
Business investment grew 4.3 per cent in 2025, led by infrastructure-related assets and utilities, though broader investment remains uneven. The MPC noted that rising uncertainty could weigh modestly on investment decisions in the near term.
Taking these factors into account, the committee said maintaining the current policy stance is appropriate, while remaining ready to act if needed to ensure inflation returns to the 2 per cent target over the medium term.
Fibre2Fashion News Desk (SG)
