Bank of England holds interest rates steady despite inflation easing to 2% target

LONDON — The Bank of England on Thursday opted to keep interest rates steady at its June meeting, confirming market expectations even after U.K. inflation hit its 2% target.

It keeps the central bank's key rate at a 16-year high of 5.25%, where it has been held since August 2023.

Seven members of the Monetary Policy Committee voted to hold, while two favored to cut, the same as during the bank's May meeting.

Inflation data on Wednesday showed headline price rises cooled to 2% in May, meeting the central bank's target ahead of the U.S. and the euro zone, despite the U.K. suffering a sharper spike inflation over the last two years.

However, economists say the U.K.'s continued high rates of services and core inflation suggest the potential for ongoing upward pressure.

Other central banks in Europe have begun to ease monetary policy, including the Swiss National Bank, European Central Bank and Sweden's Riksbank, as they seek to reboot economic growth.

That's even as the U.S. Federal Reserve, sometimes viewed as the central bank leader due to the U.S.'s outsize influence on the global economy, has left traders pondering when its first rate cut will come. Money market pricing suggests a 64% chance of a September cut, according to LSEG data.

This is a breaking news story and will be updated shortly.