CBI responds to MPC interest rate decision - June 2025

Alpesh Paleja, Deputy Chief Economist, CBI, said:

"Today's pause on interest rates is a pit stop on the way down. While inflation is likely to be bumpy over the next few months, we expect that the Monetary Policy Committee will look through this. Price pressures are gradually waning as the MPC predicted and downside risks to inflation are growing, particularly as the labour market looks to be cooling more decisively.

"Nonetheless, there is still entrenched concern among some of the MPC about the persistence of underlying price pressures. The Committee will likely want to see further evidence that indicators of domestic inflationary pressure are easing - particularly wage growth, which remains higher than the MPC would like. They will also have one eye on whether renewed conflict in the Middle East will cause an oil price shock, which would have the potential to push up inflation even further.

"The balance of all these factors reinforces our view that while the Bank will reduce interest rates further, they will do so gradually. We expect the MPC to cut rates three more times, bringing Bank rate to 3.5% early next year."