Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Bank of England Holds Interest Rate at 16-year High

Fri 22 Mar 2024 | 05:36 AM
Taarek Refaat

The Bank of England kept interest rates at their highest levels in 16 years, allowing more time to calm inflationary pressures before it eases them in the fastest tightening cycle in decades.

Eight members of the nine-member Monetary Policy Committee voted to set the key lending rate at 5.25%.

Governor Andrew Bailey opened the door to easing monetary policy later this year at a February meeting, but was more ambiguous than the US Federal Reserve and the European Central Bank on when easing might begin. Investors are betting that the first cut will arrive in August, followed by at least another cut before the end of the year.

British inflation slowed in February by slightly more than economists and the Bank of England expected.

The Office for National Statistics said on Wednesday that consumer prices rose a slightly less-than-expected 3.4% year-on-year in February, slowing from 4.0% in January, the lowest inflation rate since September 2021.

A Reuters poll of economists' opinions, and the Bank of England's forecasts published last month, expected annual inflation to reach 3.5%.

The decline was driven by a decline in food and restaurant prices, while automobile fuel prices rose.

Core inflation, which excludes energy, food and tobacco prices, slowed to 4.5%, down from 5.1% in January. The Reuters poll indicated a reading of 4.6%.