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Bank of England Keeps Interest Rates Steady at 4.5%, Citing Economic Uncertainty

The Monetary Policy Committee votes 8-1 to hold rates, warning against assumptions of imminent cuts as inflation and global trade tensions weigh on the outlook.

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The Bank of England building is seen on the day of an interest rate decision, in London, Britain, February 6, 2025. REUTERS/Toby Melville TPX IMAGES OF THE DAY
The Bank of England base rate was cut in February

Overview

  • The Bank of England has decided to maintain interest rates at 4.5%, with an 8-1 vote by the Monetary Policy Committee.
  • Governor Andrew Bailey emphasized ongoing economic uncertainty, including global trade tensions and domestic fiscal challenges, as key factors in the decision.
  • Inflation is now forecast to peak slightly higher at 3.75% in Q3 2025, while Q1 economic growth estimates were revised up to 0.25%.
  • The Bank has been less aggressive in cutting borrowing costs compared to the U.S. Federal Reserve and European Central Bank, reflecting its cautious approach.
  • Finance Minister Rachel Reeves is expected to announce public spending cuts in her upcoming Spring Statement, potentially impacting the economic outlook further.