The Bank of England has voted to leave interest rates unchanged at 4%, as policymakers balance persistent inflation risks against signs of slowing growth.
The Monetary Policy Committee (MPC) decision came a day after official figures showed UK inflation rose to 3.8% in August. According to the Office for National Statistics (ONS), food inflation climbed for a fifth consecutive month to 5.1%, with economists at Pantheon Macroeconomics forecasting a peak of 5.8% in December.
Adding to concerns, separate data this week revealed that wage growth remained elevated at 4.8% in July, fuelling fears of second-round inflationary effects.
The BoE’s decision followed swiftly on the heels of the US Federal Reserve’s rate cut on Wednesday, its first since President Donald Trump’s return to office in January, amid reports of sustained political pressure.
Bailey: Rate Cuts Must Be ‘Gradual and Careful’
Bank of England Governor Andrew Bailey has warned that interest rate reductions must be taken “gradually and carefully,” after the Monetary Policy Committee (MPC) voted to hold borrowing costs at 4%.
The MPC voted 7–2 in favour of no change, with Swati Dhingra and Alan Taylor backing a 25 basis point cut.
Bailey said: “We held interest rates at 4pc today. Although we expect inflation to return to our 2pc target, we’re not out of the woods yet so any future cuts will need to be made gradually and carefully.”
