The Bank of England has elected to hold its benchmark interest rate at its current level of 5.25% ahead of national elections that are scheduled to take place on July 4.
Interest rates in the United Kingdom are currently at their highest level in 16 years and there was some speculation that the British central bank would lower them after data showed inflation has moved down to its 2% annualized target.
However, the Bank of England's Monetary Policy Committee voted 7-2 to maintain interest rates at current levels.
In a written statement, the central bank said that while it was positive that inflation is back down to its 2% target, it remains too soon to start cutting interest rates.
“We need to be sure that inflation will stay low and that's why we've decided to hold rates at 5.25% for now,” reads the statement.
Financial markets are pricing in the Bank of England’s first interest rate cut happening in September of this year. The central bank next meets on August 1.
The decision to hold interest rates steady comes amid a national election campaign in the U.K., with the ruling Conservative Party trailing the opposition Labour Party in the polls.
While the Bank of England chose to hold interest rates steady, the central bank in Switzerland announced that it was cutting interest rates by 25-basis points for the second time this year.
Inflation in Switzerland is currently at an annualized rate of 1.4%.
