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Bank Of England Holds Interest Rate At 16-Year High

At 5.25 percent, the central bank's interest rate is at the highest level since February 2008, hurting borrowers but handing a boost to savers.


(FILES) A pedestrian crosses the streets in front of The Bank of England illuminated by a ray of sunlight, in central London, on February 12, 2024. (Photo by HENRY NICHOLLS / AFP)

 

The Bank of England on Thursday held its key interest rate at a 16-year high, opting against a reduction as inflation remains elevated despite recent slowdowns.

But BoE governor Andrew Bailey signalled a rate-reduction later this year as inflationary pressures ease further.

Bailey declared that the economy is “not yet at the point” where rates can be lowered, but things are “moving in the right direction”.

The BoE kept its key rate steady at 5.25 percent, mirroring a similar decision by the US Federal Reserve on Wednesday.

The decision came one day after official data showed that UK annual inflation slowed more than expected in February, fuelling speculation that the central bank would start cutting borrowing costs in the summer.

Inflation hit a near-2.5-year low of 3.4 percent on easing food prices.

That marked a major slowdown from 4.0 percent in January and beat expectations of 3.5 percent, but the rate remains stubbornly above the BoE’s two-percent target.

At 5.25 percent, the central bank’s interest rate is at the highest level since February 2008, hurting borrowers but handing a boost to savers.

AFP