By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News. September 19, 2024. Article no 1233.

The Bank of England has decided to maintain its key interest rate at 5% during its recent meeting, a move that aligns with expectations in the financial markets.

This decision comes after inflation in the UK held steady at 2.2%, slightly above the Bank’s target of 2%. Governor Andrew Bailey indicated that while rates are currently unchanged, they are “now gradually on the path down,” suggesting potential cuts in the future, possibly as soon as November.

At its meeting ending on September 18 , the Monetary Policy Committee (MPC) voted by a majority of 8–1 to maintain Bank Rate at 5%. One member preferred to reduce Bank Rate by 0.25 percentage points, to 4.75%. The Committee voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion over the next 12 months, to a total of £558 billion.

Inflation Concerns

The Bank’s decision reflects ongoing concerns about inflationary pressures, particularly in the services sector, which is crucial to the UK economy. Despite a recent cut in rates last month, the Bank is cautious about making further reductions without more favorable economic data.

Future Rate Cuts

Economists predict that while rates will remain at 5% for now, there is a strong possibility of cuts in November, especially as economic indicators suggest a softening labor market and sluggish growth.

Impact on Borrowers and Savers

Keeping rates steady means that borrowing costs for loans and mortgages will remain high for the time being. Homeowners with fixed-rate mortgages may face higher repayments when their agreements expire, while savers continue to see limited returns on their deposits.

Read also : Gold : Build Your Wealth and Freedom

This decision by the Bank of England reflects a careful balancing act between supporting economic growth and managing inflation, with future adjustments likely dependent on evolving economic conditions.

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© Copyright 2024 – Eurasia Business News. Article no. 1233