The Bank of England has kept UK interest rates steady at 4.5%, despite concerns that trade tensions could weigh on economic growth.
Policymakers faced a difficult choice between a slowing economy and persistent inflation but ultimately held rates.
The decision was not unanimous, with the Monetary Policy Committee voting 8-1 to maintain the current rate. Swati Dhingra was the sole member advocating a quarter-point cut to 4.25%. Meanwhile, Catherine Mann, who had previously backed a rate cut alongside Dhingra, opted to keep rates unchanged.
Announcing the decision, the Bank says:
As the Committee noted in February, there has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations. That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.
Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded. Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.
The Bank of England’s widely anticipated decision follows the Federal Reserve’s latest meeting on Wednesday.
The US central bank also held interest rates steady but downgraded its growth forecast for the world’s largest economy, citing growing uncertainty driven by President Trump’s trade policies.
Sanjay Raja, senior economist at Deutsche Bank, noted that the Monetary Policy Committee (MPC) will need to navigate carefully, stating, “The path ahead will be one of careful calibration,” while warning that “uncertainty remains elevated.”
