BANK OF ENGLAND HOLDS INTEREST RATE AT 4% AMID STUBBORN INFLATION AND WEAK GROWTH
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Agency Report
The Bank of England (BoE) on Thursday kept its benchmark interest rate unchanged at 4 percent, citing persistent inflation pressures despite the UK’s stagnant economic growth.
The widely expected decision came a day after the US Federal Reserve delivered its first rate cut of 2025.
“Although we expect inflation to return to our two-percent target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully,” BoE governor Andrew Bailey said.
Official data on Wednesday put annual inflation at 3.8 percent in August, with the central bank forecasting a peak of 4 percent this month.
The UK economy remains sluggish, with unemployment at a four-year high. The BoE last trimmed borrowing costs in August — the lowest in two and a half years — to cushion Britain’s economy against the impact of US tariffs.
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Markets are not pricing in the next rate cut until late April, according to Lindsay James, investment strategist at Quilter.
Britain’s economy continues to struggle following higher taxes and deep spending cuts introduced by finance minister Rachel Reeves after Labour’s election victory in July 2024, piling pressure on Prime Minister Keir Starmer ahead of November’s budget.
Elsewhere, Norway’s central bank lowered its key rate to 4 percent to ease economic strain, while the Bank of Canada also cut borrowing costs this week, citing concerns over US tariffs imposed by President Donald Trump.
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