Bank of England Holds Rates Steady at 3.75 Percent
The decision follows the central bank's 25 basis point reduction at its last meeting, after holding rates steady during the two preceding sessions. The Bank Rate now sits at its lowest point since 2022.
The institution's Monetary Policy Committee approved the hold by a tight 5-4 margin, with four members advocating for a 25 basis point cut.
"Although above the 2% target currently, CPI inflation is expected to fall back to around the target from April, owing to developments in energy prices including from Budget 2025," the bank's statement indicated.
The announcement highlighted that monetary policy effects, combined with evidence of sluggish economic expansion and increasing labor market slack, have driven continued moderation in wage growth and services price inflation.
"The risk from greater inflation persistence has continued to become less pronounced, while some risks to inflation from weaker demand and a loosening labour market remain," the central bank stated.
"The restrictiveness of policy has fallen as Bank Rate has been reduced by 150 basis points since August 2024," officials noted, signaling that additional rate reductions appear probable based on current data.
"Judgements around further policy easing will become a closer call. The extent and timing of further easing in monetary policy will depend on the evolution of the outlook for inflation," the Bank of England concluded.
Annual consumer price inflation in the UK accelerated to 3.4% in December, rising from November's 3.2% reading.
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