URGENT: BOE keeps interest rate at 4.5%

The Bank of England’s (BOE) Monetary Policy Committee (MPC) decided on Thursday to keep the interest rate unchanged at 4.75 per cent, citing persistent inflationary pressures despite progress in disinflation.

“As the Committee noted in February, there has been substantial progress on disinflation over the past two years, as previous external shocks have receded, and as the restrictive stance of monetary policy has curbed second-round effects and stabilised longer-term inflation expectations. That progress has allowed the MPC to withdraw gradually some degree of policy restraint, while maintaining Bank Rate in restrictive territory so as to continue to squeeze out persistent inflationary pressures.”

Inflation to peak in Q3

UK inflation rose to 3.0 per cent in January from 2.5 per cent in December, exceeding previous forecasts. While domestic price and wage pressures are easing, the MPC projects inflation to peak at around 3.75 per cent in the third quarter of 2025 before declining.

The bank warned of rising global trade policy uncertainty and geopolitical risks but noted stronger-than-expected GDP growth. It signalled a cautious approach to future rate cuts, maintaining a restrictive stance until inflation risks subside.

“Since the MPC’s previous meeting, global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded. Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.”

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser