Bank Of England Keeps Interest Rate On Hold

Bank Of England Keeps Interest Rate On Hold

The Bank of England has maintained its stance on borrowing costs, holding them unchanged for four consecutive months while hinting at potential rate cuts soon. The central bank anticipates that inflation will soon dip below 2%, prompting cautious optimism.

Before considering a reduction in borrowing rates, the Bank emphasized the need for further evidence of sustained inflation aligning with the government-set target. It emphasised the continuous problem and the continued hazards that come with fast-rising costs.

The Monetary Policy Committee (MPC) opted to retain interest rates at 5.25%, the highest since the 2008 financial crisis. According to analysts, inflation, which stood at 4% in December, may reach target levels by April, a year earlier than the Bank of England had predicted.

In October 2022, inflation peaked at 11.1%, which prompted the Bank to take a cautious stance. In response, the Bank of England warned that rates could rise further over an “extended period.”

A key contributor to medium-term inflation trends, three of the nine policymakers at the Bank of England advocated for raising interest rates to 5.5% from 5.25%. Furthermore, they highlighted the delicate balancing act between containing inflation and stimulating economic growth.