The decision at noon was made in response to news that last month’s inflation rate—a gauge of how quickly UK consumer prices are rising—stayed at 2.2%.
Although this number is somewhat above the Bank of England’s 2% target, Governor Andrew Bailey has cautioned that a significant decline in interest rates is not likely in the upcoming months.
Investors and economists are placing bets that rates will remain steady on Thursday and that the Bank will decide to lower them once again in November.
The inflation figures reported on Wednesday, according to Rob Wood, chief UK economist at economic research agency Pantheon Macroeconomics, provided the Bank of England “no incentive to rush to decrease it.
“It remains probable that they will opt to maintain the pause in interest rates this month, delaying rate cuts until November and December,” stated Susannah Streeter, who oversees money and markets at the investment firm Hargreaves Lansdown.
Lenders establish interest rates that determine both the cost of borrowing for loans like credit cards and mortgages as well as the returns on savings.
Even though rates were lowered last month for the first time since March 2020, borrowing is still expensive, and homeowners with fixed-rate mortgages still risk having to make much larger repayments as their contracts expire over the coming years.
The bank needs to “make sure inflation stays low and be careful not to cut interest,” Mr. Bailey has previously said.
