Bank of England holds rates at 4.5%
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The news: The Bank of England has held interest rates steady at 4.5%, saying it will stick to a “gradual and careful” approach to easing.
The numbers: The BoE’s Monetary Policy Committee (MPC) voted eight to one to leave the rate unchanged, with one member preferring to reduce the rate by 0.25 basis points to 4.25%.
The central bank said that 12-month CPI inflation increased to 3% in January from 2.5% the month prior, slightly above expectations.
The BoE added that despite global energy prices falling back recently, they remain higher than 2024 and CPI inflation is now expected to rise to around 3.75% in Q3 2025, well above its 2% target.
Thursday’s decision followed a quarter-point cut last month, when the BoE also halved its 2025 growth estimate to 0.75%.
The context: The central bank said that since the last MPC meeting, global trade policy uncertainty has intensified, and the US 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 MPC’s meeting minutes flagged Germany’s plans to ramp up defence spending, volatile markets, and the decline of whole energy prices tied to negotiations around a potential ceasefire in Ukraine, and the consequent possible prospect of a boost in global gas and oil supply as reflecting increased uncertainty.
Wage growth figures published earlier on Thursday showed UK wages remaining strong, at a 5.9% annual growth rate for the three months to January.
The sources: Bank of England, Bloomberg
