Gold trading near session lows as BoE leaves interest rates unchanged at 5.25%
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(Kitco News) - Gold prices have fallen to session lows against the British Pound after the Bank of England left interest rates unchanged but maintained a tightening bias for future monetary policy.
As expected the BoE left interest rates at 5.25%; however, the statement shows that three central bank committee members voted for a 25 basis point hike, which underscores some of the hawkish sentiment and focus on bringing inflation down to its 2% target.
The central bank said that it expects to bring inflation down to its 2% target by the end of 2025 and is committed to keeping interest rates at elevated level through at least the first half of 2024.
“The Committee continues to judge that the risks to its modal inflation projection are skewed to the upside. Second-round effects in domestic prices and wages are expected to take longer to unwind than they did to emerge. There are also upside risks to inflation from energy prices given events in the Middle East,” the BOE said in its monetary policy statement.
“Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the Committee’s remit. The MPC’s latest projections indicate that monetary policy is likely to need to be restrictive for an extended period of time. Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures,” the statement added.
Although gold prices have fallen to session lows against the British pound, the precious metal is not seeing much reaction to the BoE’s latest monetary policy decision. Spot gold last traded at £1,628.041 an ounce, down 0.20% on the day.
In comparison, spot gold is holding in positive territory against the U.S. dollar, last trading at $1,988.310 an ounce, up 0.30% on the day.