The Bank of England (BoE) announced on Thursday that it would keep its reference rate at 5.25%, marking a pause in its monetary tightening policy that had seen 14 consecutive increases since December 2021. This measure was taken with the intention of controlling rising inflation.
Despite this decision to hold rates, the BoE did not provide a clear indication of the future of its monetary policy and signaled that it could raise rates again if inflationary pressure persists.
The BoE’s decision appeared to be influenced by inflation data released on Wednesday, which was better than expected. The consumer price index fell to 6.7% in August, four tenths below the committee’s previous projections. This marked the lowest level since February 2022, partly due to stabilizing food prices.
The governor of the BoE, Andrew Bailey, highlighted that although inflation has decreased in recent months, there is no room for complacency and that they are attentive to the country’s economic situation.
The BoE’s decision follows that of the United States Federal Reserve, which also chose to maintain its interest rates. In contrast, the European Central Bank (ECB) recently raised interest rates. Meanwhile, the Bank of Norway raised its main rate for the 13th time in two years, and the Central Bank of Sweden raised the policy rate to 4%, its highest level in 15 years.
The Bank of Japan (BOJ) will be the last to announce its monetary decision this week, completing a series of moves at central banks around the world.