The UK’s central bank, the Bank of England, has kept its main interest rate on hold at 4.75%, as expected.
The rate will stay in place until at least next February, following the BoE’s vote to keep the cost of borrowing at its present rate.
In its last meeting of 2024, the Bank’s rate-setting committee, the Monetary Policy Committee (MPC) left the rate on hold because of recent figures showing an increase in inflation and wage growth.
The Bank will meet next in February, when it will give an update on its forecasts for Britain’s economy.
BoE governor Andrew Bailey has previously indicated that he expected rates to fall further, the cut would be gradual. There have been two rate cuts this year.
In a statement after announcing the decision, the Bank of England said: “At its meeting ending on 18 December 2024, the MPC voted by a majority of 6–3 to maintain Bank Rate at 4.75%. Three members preferred to reduce Bank Rate by 0.25 percentage points, to 4.5%.
“Since the MPC’s previous meeting, twelve-month CPI inflation has increased to 2.6% in November from 1.7% in September. This was slightly higher than previous expectations, owing in large part to stronger inflation in core goods and food. Services consumer price inflation has remained elevated. Headline CPI inflation is expected to continue to rise slightly in the near term. Although household inflation expectations have largely normalised, some indicators have increased recently.
“The Committee continues to monitor closely the risks of inflation persistence and will assess the extent to which the evolving evidence is consistent with more constrained supply, which could sustain inflationary pressures, or with weaker demand, which could lead to the emergence of spare capacity in the economy and push down inflation.
“A gradual approach to removing monetary policy restraint remains appropriate.”