CBI responds to June 2026 Bank of England interest rates decision

Alpesh Paleja, Deputy Chief Economist, CBI, said:     

“The Bank of England was widely expected to keep interest rates on hold this month. But the Monetary Policy Committee’s focus has now shifted towards digesting the implications of the US-Iran deal to extend the ceasefire and restore energy flows through the Strait of Hormuz. 

“For now, the deal does little to change the economic outlook, particularly given that global energy flows are unlikely to return to normal immediately. Inflation is still set to rise meaningfully in the months ahead, reflecting the increase in energy prices since the conflict began. The MPC will be watching closely for signs that this feeds through into more persistent domestic price pressures, particularly wage growth, though a softer labour market should limit those risks. 

“With uncertainty remaining high and inflation still expected to rise, interest rates are likely to stay on hold for some time yet. Nonetheless, the US-Iran deal reduces the risk of the MPC’s more severe inflation scenario playing out. This makes a renewed rise in interest rates much less likely, even though some of the Committee’s more hawkish members might need more reassurance.”