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Bank of England Holds Interest Rates at 4.5% Due to Questionable ONS Data

Reliability concerns over shrinking survey samples have left the Bank depending on HMRC figures during an ONS methodology overhaul

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Overview

  • The Bank of England kept its benchmark rate at 4.5% after Governor Andrew Bailey warned that ONS job and wage figures carry a "very severe health warning".
  • ONS labour market surveys have struggled with low response rates and smaller sample sizes since the pandemic, raising doubts about their accuracy.
  • Deputy Governor Sarah Breeden said the Bank is using HM Revenue and Customs data to fill gaps, though it excludes self-employed workers.
  • Analysts warn that delayed rate cuts driven by data uncertainty could cost around 8.4 million mortgage holders, especially the 1.1 million on variable rates, hundreds of pounds annually.
  • The ONS admitted a recent inflation miscalculation and describes its improvement efforts as a work in progress amid an ongoing methodology overhaul.