A person shields themselves from the rain while walking near the Bank of England building on the day the Monetary Policy Committee lowered interest rates, in London, Britain, Dec.18, 2025.
Toby Melville | Reuters
U.K. inflation held at 2.8% in May, slightly below expectations, official figures showed on Wednesday.
Economists polled by Reuters had been expecting the annual inflation rate to rise to 3% in May.
Inflation cooled to 2.8% in April, but the drop — attributed to a change to the U.K.’s regulated energy price cap — was expected to be short-lived. The price cap is due to rise by 13% later this summer, when energy costs will hit a 2-year high.
At its most recent meeting, the Bank of England’s Monetary Policy Committee voted to keep its key interest rate at 3.75%.
Policymakers said at the time that “monetary policy cannot influence energy prices” in reference to the impact of the U.S.-Iran war, which has kept oil and gas prices elevated for months amid the closure of the Strait of Hormuz.
Markets are pricing in a 95% chance that the Bank of England holds rates steady at its next meeting on Thursday, LSEG data shows — but traders are expecting the central bank to hike interest rates by the end of this year.
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Correction: This story has been updated to reflect that May inflation hit 2.8%.
