BoE holds rates at 5% in cautious approach to easing
Make us a preferred source
Make us a preferred source on Google
The news: The Bank of England (BoE) held its interest rate at 5%, with an 8-1 vote favouring keeping rates on hold.
Only Swati Dhingra, the committee's most dovish member, dissented, advocating for a 0.25% rate cut.
The context: The decision follows the BoE’s 0.25 percentage point rate cut in August that lowered rates from their 16-year peak.
In contrast, the US Federal Reserve on Thursday took a more aggressive approach, starting its easing cycle with a 0.5 percentage point rate reduction.
With inflation still above target and wage growth an ongoing concern, the BoE wants to avoid cutting rates "too fast or by too much," Governor Andrew Bailey said.
The numbers: The bank said it now expects inflation to rise to 2.5% by the year-end, down from an earlier forecast of 2.75%.
The BoE plans to reduce its bond holdings without accelerating the pace, with its quantitative tightening programme continuing at a £100 billion ($194 billion) pace over the next year, in line with expectations.
What they said: “It's vital that inflation stays low, so we need to be careful not to cut too fast or by too much,” Governor Bailey said.
“We should be able to reduce rates gradually over time.”
The sources: Bank of England , Bloomberg
