(Reuters) – The Bank of England (BOE), as expected, left unchanged its main key rate at 4.25%unchanged on Thursday, and indicated that it would focus on the weakening of the labor market and the increase in energy prices with tensions in the Middle East.

The BOE Monetary Policy Committee (MPC) voted by 6 votes against 3 in favor of this status quo, while a Reuters survey carried out with economists provided for a 7-2 vote for the maintenance of rates.

“Interest rates remain on a downward gradual trajectory,” said BOE governor Andrew Bailey, although political decision -makers have added that interest rates were not on a pre -established trajectory.

“The world is very unpredictable. In the United Kingdom, we observe signs of slowdown on the labor market. We will carefully examine to what extent these signs have repercussions on consumer prices inflation,” he added.

The central bank also mentioned growing tensions in the Middle East which have not been decisive in the June decision would now be closely followed.

The BOE has also adopted a less pessimistic tone on the potential consequences of global trade tensions and has left its inflation forecasts overall unchanged for the second half of this year, providing for a maximum rate of 3.7% in September and an average of just under 3.5% for the rest of the year.

The economy should grow by around 0.25% in the second quarter of this year, a little more than in its May forecasts, although the underlying pace is low.

Reactions of the steps

The markets reacted relatively little to this widely awaited and anticipated decision, the FTSE displaying a drop of 0.21% around 11:19 GMT while the yield of Gilts at two years fell to its lowest level of the session to 3.886% before increasing slightly to 3.897%.

The pound sterling lost ground before returning almost stable around $ 1.342.

Since the start of the current adjustment cycle of its monetary policy, started in August 2024, the BOE has reduced its rates by only 100 base points, a slower pace than that of the main central banks in the world.

The main key rate of the BOE had climbed to 5.25% following a total of 14 increases between December 2021 and August 2023. The central bank had dropped by 25 base points at the end of its last meeting in May.

On Wednesday, the American Federal Reserve (FED) has left its rates unchanged while the Swiss National Bank and the Central Bank of Norway lowered their main key rate on Thursday.

(Written by Suban Abdulla and David Milliken, Bertrand de Meyer, edited by Sophie Louet)

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