The Bank of England has warned against complacency after its interest rate was frozen at 5.25%.
Governor Andrew Bailey said he is determined to bring inflation back down to the target level of 2% – but with current rates at 6.7%, he added that “the job isn’t done yet”.
And amid speculation that the Bank’s base rate could now be close to peaking, he warned: “I can tell you we have not had any discussion on the Monetary Policy Committee about reducing rates because that would be very, very premature.”
Reaction to BoE’s decision – latest updates
The decision to leave the interest rate unchanged came a day after inflation unexpectedly fell by more than expected – ending the longest successive period of “tightening”.
Before now, the Bank had raised rates 14 times in a row – and the last time they were left unchanged was in November 2021.
The Monetary Policy Committee’s latest vote was a narrow one – and while five members had voted in favour of a freeze, four had felt rates should rise further to 5.5%.
On Wednesday, the US Federal Reserve had also opted to hold its interest rate steady – but crucially, both central banks are reserving the right to enforce further hikes in the future.
As the City of London digested the BoE’s decision, the pound fell to its lowest level since March – with British stocks outperforming the wider market.
Analysis: This freeze will still be painful
It is arguably the most exciting non-event in recent economic history.
Today, for the first time since late 2021, the Bank of England voted to leave borrowing costs unchanged.
Now in some senses, this is indeed a non-event. Interest rates are no higher than they were yesterday, but the cost of borrowing remains…
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This notice was published: 2023-09-21 13:52:00
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