Bank of England Keeps Interest Rates at 15-Year High Amid Economic Concerns

The Bank of England (BoE) has decided to keep its interest rates unchanged at a 15-year high of 5.25% for the second consecutive meeting, aligning with recent moves by the Federal Reserve and the European Central Bank. This decision, announced on Thursday, marks a pause after nearly two years of rate hikes aimed at addressing inflation.

The choice was supported by six out of nine members of the rate-setting committee, who observed signs of a slowing economy and reducing inflationary pressures. Inflation stood at 6.7 percent in September, underscoring the need for a sustained monetary policy designed to address what the committee identified as “more deeply embedded inflation persistence.”

Governor Andrew Bailey highlighted the effectiveness of the current interest rates in curbing inflation but reiterated the importance of achieving the target rate of 2 percent. The bank’s forecast suggests economic stagnation over the next two years, with inflation expected to be slightly higher than previously anticipated in 2024 and 2025, projecting a decline to 3.4 percent by the end of next year.

Amid the economic challenges, three committee members indicated an increase in household incomes and positive economic output signals, advocating for a quarter-point rate increase. This proposal followed a prior meeting where five members opted to keep rates unchanged.