Three members preferred to reduce the rate by 0.25 percentage points, to 4%.
The Bank noted that ‘underlying UK GDP growth appears to have remained weak, and the labour market has continued to loosen, leading to clearer signs that a margin of slack has opened up over time’.
It added that pay growth is expected to significantly slow over the rest of the year and the committee remains vigilant about how easing pay pressures will feed into inflation.
Twelve-month CPI increased to 3.4% in May from 2.6% in March, in line with expectations in the May Monetary Policy Report. The Bank said it expects inflation to ‘remain broadly at current rates throughout the remainder of the year before falling back towards target next year’.
Nick Leeming, chairman of Jackson-Stops said: “Holding rates today reflects the air of uncertainty that has entered the UK economy. A combination of geopolitical tensions, as well as continuing inflationary pressures at home, has resulted in any rate reductions being deferred until later in the year.
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“For the property market, today’s decision to hold rates will not immediately effect mortgage rates on the market but it may cause slight hesitancy to enter into the buying process.
“Committed buyers will not be knocked off course by the Bank of England’s actions today, the market remains in a robust position with completions able to take place.”
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