The Bank of England has decided to keep its key interest rate at 4.75 percent, opting not to follow the US Federal Reserve’s recent decision to cut rates, as inflation in the UK has risen again.
BoE Governor Andrew Bailey explained the decision, stating, “We’ve held interest rates today following the two cuts since the summer. We need to ensure we meet the two-percent inflation target on a sustained basis.” This decision came after UK inflation climbed to 2.6 percent, as reported by recent data.
The rate decision was expected, following the US Federal Reserve’s quarter-point rate cut the previous day, although it signaled fewer rate reductions for the coming year. Meanwhile, the European Central Bank reduced rates last week, and the Bank of Japan kept its rates unchanged in a decision announced Thursday.
UK Finance Minister Rachel Reeves expressed support for the BoE’s decision, acknowledging the strain it places on households. If the BoE had reduced rates, retail banks would likely have lowered borrowing costs on mortgages. “I know families are still struggling with high costs,” Reeves said, adding, “We want to put more money in the pockets of working people, but that is only possible if inflation is stable, and I fully back the Bank of England to achieve that.”
