Bank of England holds rates
Despite concerns about the British economy, the Bank of England kept borrowing rates unchanged at 5.25%, maintaining a 15-year high. Six members of the Monetary Policy Committee voted to hold rates, signaling no imminent rate cuts. Governor Andrew Bailey stated that interest rate policy would likely remain “restrictive for an extended period.” The bank, successful in lowering inflation from over 11%, aims to reach its 2% target as inflation stands at 4.6% in the year to October. While rate increases addressed inflation, there are growing concerns that sustained high rates may harm the economy. The Bank of England’s decision contrasts with the U.S. Federal Reserve’s expectation of three interest rate cuts next year. The European Central Bank is also anticipated to hold rates. The timing of rate cuts by the Bank of England could impact the Conservative Party in the upcoming general election, facing challenges amid high borrowing rates and low economic growth.
