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At the last meeting in April, the committee members voted 8-1 for a hold, with Huw Pill, the Bank’s chief economist, the only one to vote for a rate rise.<\/p>\n
This time, the vote was 7-2, with Megan Greene voting alongside Pill for an increase in the rate to 4%. She highlighted the uncertainty over the impact on households and businesses of higher energy prices.<\/p>\n
The MPC met just before the US-Iran peace deal was signed and will meet again at the end of July, when its success and longevity should be clearer.<\/p>\n
Speaking later, Bailey said he was “encouraged” by recent developments in the Middle East. <\/p>\n
“Energy prices have come down quite a lot, but they’re still above where they were before this conflict started. Inflation is higher than we expected it to be,” he said.<\/p>\n
“I think holding is the right position to be in at the moment for that, so I think it’s a sensible decision in the light of the news.”<\/p>\n
The peace deal, which was signed on Wednesday, could lead to the reopening of the Strait of Hormuz.<\/p>\n
Should oil start to flow freely again through the vital waterway – which normally carries a fifth of the world’s oil and gas supplies – then concerns over a pick-up in inflation would be eased.<\/p>\n
Price rises are still expected to accelerate in the UK, given the delayed impact of higher wholesale energy prices on domestic gas and electricity prices.<\/p>\n
Millions of UK households’ energy bills are governed by regulator Ofgem’s price cap, which will increase by 13% in July.<\/p>\n
However, the committee has lowered its overall inflation expectations since its last meeting in April, with an expectation that the rate will hit 3.25% in the final three months of the year. This is below even its most benign scenario outlined by the Bank earlier in the year, but still above the 2% target.<\/p>\n<\/div>\n
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