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The Bank of England has kept benchmark rates on hold at 4.5 per cent as it grapples with the combination of a sluggish economy and continuing price pressures.
Thursday’s eight-to-one vote by the Monetary Policy Committee followed a quarter-point cut last month, when the BoE also halved its 2025 growth estimate to 0.75 per cent. One MPC member, Swati Dhingra, voted for a further quarter-point cut.
“There’s a lot of economic uncertainty at the moment,” said Andrew Bailey, BoE governor. He said that, while the bank had held rates at 4.5 per cent, “we still think that interest rates are on a gradually declining path”.
He added: “Whatever happens, it’s our job to make sure that inflation stays low and stable.”
Inflation reached 3 per cent in January, and is set to climb further above the central bank’s 2 per cent target by mid-year.
Figures published earlier on Thursday showed wage growth remaining strong, at a 5.9 per cent annual rate for the three months to January, excluding bonuses.
Before the MPC meeting, traders had fully priced in two further quarter-point cuts to base rates this year, with the first expected to come in June, according to the levels implied by swaps markets.
The pound crept higher after the decision, down 0.2 per cent on the day at $1.298 after having fallen earlier in the day.
This is a developing story
