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Bank of England keeps rates at 5.25%

STORY: The Bank of England kept its main interest rate unchanged on Thursday (June 19).

It stays at a 16-year high of 5.25% ahead of an election on July 4.

But some policymakers said their decision not to cut was now "finely balanced."

The central bank's main committee voted 7-2 to keep rates on hold.

Bank of England governor Andrew Bailey said it was "good news" the latest data had shown inflation was back at its 2% target.

But he reiterated it was too soon to cut rates as the bank needed to make sure inflation will stay low.

The Bank said indicators of inflation persistence - mainly wage growth and services inflation - had moderated since its May meeting, but remained high.

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Big services price inflation and rapid wage growth also meant it was too soon to cut rates for some on the Bank's voting Committee.

Markets have heavily priced in a first quarter-point cut by September's meeting.

Any cut is likely to be too late for Prime Minister Rishi Sunak.

Hit Conservative Party is around 20 points behind the opposition Labour Party in the pre-election polls.

Sunak has sought credit for the fall in inflation since he took office in October two years ago, when inflation was at a 41-year high of 11.1%.

But Labour blames high mortgage rates on economic mismanagement by the Conservatives' previous leader, Liz Truss.

The central bank said the upcoming election had no impact on its decision.