The Bank of England has decided to keep its benchmark interest rate at 4.5%, despite concerns about the UK’s sluggish economic growth. The central bank’s move comes amid rising uncertainty, particularly with the looming threat of U.S. tariffs under the Trump administration.
The decision, made by the nine-member Monetary Policy Committee, was widely anticipated. It follows the U.S. Federal Reserve’s own decision to hold interest rates steady just a day prior. According to the minutes from the meeting, eight members voted to maintain the current policy, with one member supporting a quarter-point rate cut.
Since last August, the Bank of England has reduced its key interest rate from a 16-year high of 5.25%, with three quarter-point cuts, the latest occurring in February after inflation decreased from over 10%.
Inflation in the UK is currently at 3%, still above the bank’s target of 2%, and is expected to rise further in the coming months. “There’s a lot of economic uncertainty at the moment,” Bank of England Governor Andrew Bailey said. “We still think that interest rates are on a gradually declining path, but we’ve held them at 4.5% today.”
UK inflation reached a 10-month high of 3% in January, and economists predict it could climb to 4% in the near future, even before factoring in potential U.S. tariffs.
The UK’s economy, the sixth-largest in the world, saw only a modest growth of 0.1% in the fourth quarter, which is a disappointing result for the new Labour government that has prioritized boosting economic growth.
