The Bank of England on Thursday decided to keep its benchmark interest rate unchanged at 4%, as inflation in the UK continues to remain well above its 2% target and policymakers await the government’s upcoming national budget.
The decision by the nine-member Monetary Policy Committee was narrowly split, with five members voting to maintain the current rate and four favoring a 0.25 percentage point cut.
Governor Andrew Bailey said the central bank still expects interest rates to move gradually downward but emphasized that policymakers must be confident inflation is heading sustainably toward the 2% target before easing further.
Consumer price inflation currently stands at 3.8%, nearly twice the bank’s goal. While inflation is projected to fall in the coming months and potentially return to target next year, uncertainty ahead of the Nov. 26 budget has prompted the bank to act cautiously.
Treasury chief Rachel Reeves has already warned that taxes may need to rise in the budget, a move that could weigh on Britain’s sluggish economy but also help curb price pressures. She has signaled that bringing inflation down remains a key priority for the government.