The Bank of England has held interest rates at 4 per cent, pausing its cycle of monetary easing as governor Andrew Bailey warned that Britain was “not out of the woods yet” on inflation.
The decision, taken by the Bank’s nine-member Monetary Policy Committee (MPC), saw seven members vote to leave rates unchanged while two backed a quarter-point cut. The outcome was in line with market expectations, with investors betting that rates will remain at 4 per cent for the rest of 2025.
Alongside the rate decision, the central bank announced that it would slow the pace of government bond sales. Over the next 12 months, it will shrink its balance sheet by £70 billion — down from £100 billion last year — through a mix of gilt sales and maturities. The Bank said the move was designed “to minimise the impact on gilt market conditions” after long-term UK debt yields surged to their highest level in nearly three decades.
Bailey said the decision to adjust the pace of bond disposals was made “to better reflect demand conditions”. Bond yields and prices move inversely, and markets had been nervous about heavy gilt supply following record issuance this September.
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