BoE announces June rate decision at 1100 GMT
Bank expected to keep rates at 16year high of 5.25
Economists expect August rate cut, markets tend later
UK inflation back at 2 target but likely to rise again

LONDON, June 20 Reuters Britain39;s central bank looks on course to hold interest rates at a 16year high of 5.25 on Thursday as underlying inflation pressures prove persistent, depriving Prime Minister Rishi Sunak of a muchneeded boost ahead of a July 4 election.

Bank of England Governor Andrew Bailey opened the door early last month to a rate cut, saying he was optimistic that things are moving in the right direction and that a June rate cut was an option although no fait accompli.

But despite data on Wednesday showing headline inflation fell back to the BoE39;s 2 target for the first time in nearly three years in May reaching its goal quicker than in the United States or euro zone the mediumterm picture is now less reassuring.

Services price inflation has fallen less than the BoE expected at the time of the last meeting only declining to 5.7 rather than 5.3 and privatesector wage growth is almost twice the rate the BoE judges as compatible with 2 inflation.

Last month the central bank forecast inflation would rise to around 2.6 by the end of the year, as the effect of recent cuts to regulated household energy bills faded.

None of the 65 economists in a Reuters poll last week said they expected the BoE to follow the lead of the European Central Bank and…