The Bank of England has opted to keep its main UK interest rate at 5.25%, maintaining the 16-year high, amid concerns from several policymakers regarding certain inflation metrics.
In a statement released on Thursday, the Monetary Policy Committee, consisting of nine members, voted 7-2 to retain the current rates, with two members advocating for a quarter-point decrease. This marks an increase in the number of policymakers supporting a rate reduction compared to the previous meeting, signaling a potential shift towards rate cuts.
Similar to the recent decision by the US Federal Reserve to keep rates unchanged, the majority of the committee members expressed the need for further evidence indicating that inflationary pressures are being effectively managed.
Following the aggressive interest rate hikes initiated by the Bank of England, along with other central banks globally, towards the end of 2021 in response to inflationary pressures arising from pandemic-induced supply chain disruptions and geopolitical tensions such as Russia’s invasion of Ukraine, the current stance reflects a cautious approach awaiting clearer signals of inflation moderation.
