Bank of England holds interest rates steady in a difficult environment, as widely expected
Investment Policy & regulation Personal finance
The Bank of England’s Monetary Policy Committee (MPC) voted to hold base rates steady today, at 4.5%, with a majority vote of 8 for the decision and only 1 member voting for a reduction.
Natalie Brain, Partner in LCP’s investment team, commented:
“UK inflationary pressures persist, with the latest available CPI for the 12 months to January up 3.0%, well above the Bank’s inflation target of 2%. And while figures released today by the ONS suggest some cooling in the labour market, wage growth for the three months to January fell only slightly compared with December’s figure, down from 6.1% to 5.8%.
She added:
“Despite the almost unanimous vote, the Bank of England is between a rock and a hard place. The UK’s growth outlook is poor – growth forecasts for 2025 have been reduced amid escalating trade tensions following President Trump’s various and varying tariff threats. While a cut to interest rates could have acted as a useful economic shot in the arm, the Bank clearly decided that the combination of sticky inflation and wage growth was the bigger concern. All eyes will be on the February CPI print due on 26 March, coincidentally the same day as the Chancellor’s Spring Statement.”
