The Bank of England (BoE) held its key interest rate at 5.0%, opting not to implement consecutive cuts.
Yesterday, the Bank of England (BoE) decided to keep its key interest rate at 5.0%, choosing not to pursue consecutive reductions.
Following a routine meeting, BoE Governor Andrew Bailey stated that the central bank must “be cautious about cutting too quickly or too deeply” as inflation in the UK remains above the 2% target.
Monetary policymakers voted 8 to 1 in favor of leaving rates unchanged, following a narrow decision in August to implement a cut. One member pushed for a reduction to 4.75% this time.
Official data showed that UK inflation remained steady at 2.2% year-over-year in August, although it has retreated from a four-decade high of over 11% reached in late 2022.
Last week, the European Central Bank (ECB) cut its rates for the second time in 2024. Analysts expect the BoE to lower borrowing costs again in November, with Bailey hinting that more easing is on the horizon.
“The economy has generally evolved as we expected (…) If this continues, we should be able to gradually reduce rates over time. But it’s crucial that inflation remains low,” Bailey remarked.
“By keeping interest rates at 5.0%, the BoE is showing a more gradual approach, similar to the ECB, unlike the Federal Reserve, which is cutting rates more swiftly,” noted Paul Dales, Chief UK Economist at the research group Capital Economics.
The BoE raised borrowing costs 14 times between late 2021 and mid-2023.