2025.09.1811:02:18UTC+00BoE Keeps Rates Steady

The Bank of England's recent decision on monetary policy resulted in a 7–2 vote to maintain the Bank Rate at 4%, with two members advocating for a reduction of 25 basis points to bring it to 3.75%. In addition, the Monetary Policy Committee (MPC) decided by the same margin to decelerate the pace of quantitative tightening by reducing gilt holdings by £70 billion over the forthcoming year, bringing the total to £488 billion. Policymakers have observed advancements in reducing inflationary pressures stemming from prior economic shocks, aided by a restrictive policy stance, though inflation levels remain above the target. The Consumer Price Index (CPI) was recorded at 3.8% in August, with a slight increase anticipated in September, before aligning back towards the 2% target. Although wage growth is still high, it has begun to ease and is projected to decline further. Conversely, services inflation has remained steady. The MPC recognized potential upward risks to inflation in the medium-term but acknowledged a subdued GDP growth rate, a loosening labor market, and economic slack. Looking forward, the committee stressed the importance of a gradual and data-driven approach, with no predetermined course for interest rate reductions, allowing them the flexibility to adapt to future developments.