Bank of England Keeps Interest Rates Unchanged

Investing.com – The Bank of England left interest rates unchanged Thursday, taking a gradual approach towards easing its monetary policy as inflation pressures remain significant.

Policymakers voted 6 to 3 to keep the Bank Rate at 4.75%, avoiding the 7-2 split expected, after a 25 basis point cut in November—its second cut this year following the first cut in August, marking the initial easing since the pandemic in 2020.

UK consumer price inflation climbed to 2.6% in November, up from 2.3% the previous month, moving further away from the Bank of England’s 2.0% medium-term target.

Additionally, British pay rose more than expected in the three months to October, raising concerns about underlying inflation pressures.

The Bank's updated macro projections suggested that the Autumn Budget could raise inflation by approximately 0.5 percentage points, predicting inflation would return to 2% only in early 2027—one year later than previously estimated in the Bank's August projections, according to analysts at UBS.

Governor Andrew Bailey highlighted significant uncertainty regarding the impact of the Budget measures and potential labor market adjustments during a press conference, indicating a commitment to a data-dependent approach for future policy decisions.

Currently, investors have priced in only a 50% chance of a rate cut in February and anticipate just two cuts for the entirety of 2025.