Bank of England keeps interest rates on hold at 5.25%
The Bank of England has kept interest rates on hold for the first time in almost two years, leaving borrowing costs at 5.25% amid growing concerns over the strength of the UK economy.
In a critical week for the economy, the Bank’s monetary policy committee halted the cycle of rate hikes – after 14 consecutive rises since the end of 2021 – over concerns about the economy and after figures on Wednesday showed a surprise fall in inflation.
Financial markets had been on a knife-edge in the run-up to the decision, with the City pricing in a near-even chance of a further quarter-point increase. Many economists expect the Bank to keep rates unchanged for a prolonged period to prevent persistent inflationary pressures from taking root.
In the toughest rate-hiking cycle in decades, borrowing costs are at the highest level since the 2008 financial crisis after successive increases by the central bank from a record low of 0.1% in December 2021.
It comes after the Bank, the chancellor, Jeremy Hunt, and City investors were wrong-footed by the unexpected fall in UK inflation in August, to 6.7%, while separate figures show a cooling jobs market and weaker levels of economic activity. Inflation is still well above the 2% target set by the government.
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