The Bank of England has voted narrowly to hold interest rates at 4%, pausing further cuts amid stubborn inflation and growing uncertainty ahead of Chancellor Rachel Reeves’ pivotal Budget later this month.
In a closely split decision, the Monetary Policy Committee (MPC) voted 5–4 to maintain the current rate, with Governor Andrew Bailey casting the deciding vote. Bailey said he would “prefer to wait” before supporting any further loosening of monetary policy, citing ongoing concerns about inflation expectations among households and elevated wage growth.
The Bank expects inflation to remain above its 2% target until the second quarter of 2027, forecasting a gradual decline from its current 3.8% level. Officials said consumer price inflation had “peaked” but warned that persistent price pressures — particularly in services and food — continued to pose risks.
In its latest economic outlook, the Bank maintained its growth forecast of 1.4% for both 2025 and 2026, revising up the current year slightly but lowering next year’s estimate amid weakening demand and a slowing labour market.
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