The Bank of England maintains interest rates at 5.25%

He Bank of England (BOE) made the decision this Thursday to keep interest rates unchanged, amid divisions within the Monetary Policy Committee. This is because of the nine members, six voted in favor of keeping rates at 5.25%highest level in 15 years.

However, the novelty is that Jonathan Haskel and Catherine Mann argued for a 0.25% increasewhile Swati Dhingra supported a decline of the same magnitude.

This situation marked a milestone, being the first time since August 2008, at the start of the global financial crisis, that policymakers were divided on whether to raise or lower interest rates at the same meeting.

Andrew Bailey, governor of the Bank of England, expressed the need for more evidence that inflation will stabilize at the 2% target before considering cutting interest rates. This cautious approach contrasted with the expectations of economists surveyed by Reuters, who anticipated a consensus on maintaining rates.

In a change of tone, the Bank of England abandoned the warning of a “further hardening” in case of persistent inflationary pressures, choosing to review the duration of the bank interest rate at its current level.

Internationally, the US Federal Reserve announced the possibility of rate reductions, while the European Central Bank He was also explicit in his intentions. Although the Bank of England reaffirmed the need for a “restrictive” monetary policy for long enough, it reduced its short-term inflation projections.

Interest rates in England

Highlighting notable wage growth in the UK, the bank suggested that annual inflation could return to 2% in the second quarter of this year, although medium-term projections indicated an increase above the target in the third quarter of 2024postponing its stabilization until the end of 2026.

Despite a modest improvement in annual growth forecasts and support for tax cuts from Chancellor Jeremy Hunt, the Bank of England remained cautious about economic growth in the coming quarters. The economic situation, especially the cost of living, remains a crucial issue ahead of the likely national elections this yearwhile the International Monetary Fund’s warning of tax cuts and lowered growth prospects for 2025 pose significant challenges.

At the international level, the United States Federal Reserve announced the possibility of rate reductions, while the European Central Bank was also explicit in its intentions. Although the Bank of England reaffirmed the need for a “restrictive” monetary policy for long enough, it reduced its short-term inflation projections.

Highlighting notable wage growth in the UK, the bank suggested that annual inflation could return to 2% in the second quarter of this year, although medium-term projections indicated an increase above target in the third quarter of 2024, postponing its stabilization until the end of 2026.

Despite a modest improvement in annual growth forecasts and support for tax cuts from Chancellor Jeremy Hunt, the Bank of England remained cautious about economic growth in the coming quarters. The economic situation, especially the cost of livingremains a crucial issue ahead of likely national elections this year, while the International Monetary Fund’s warning about tax cuts and the lowered growth prospects for 2025 pose significant challenges.