The Bank of England maintained UK interest rates at 4.75% despite rising inflation, defying economist expectations. Three MPC members voted for a rate cut, while six favored holding steady.
The Bank of England on Thursday ended its last meeting of the year with a decision to leave interest rates unchanged, after U.K. inflation rose to an eight-month high. Three members of the Monetary Policy Committee voted to reduce rates, while six were in favor of a hold. Economists polled by Reuters had forecast only one member would vote to cut. Sterling pared gains against the U.S. dollar directly following the BOE announcement, trading 0.2% higher at 12:22 p.m.
The BOE has already taken its key rate from 5.25% to 4.75% this year in two quarter-percentage-point moves. In a statement, the BOE said the increase in U.K. headline inflation in November to 2.6% was slightly higher than previously expected, adding that services inflation remained'elevated.' BOE staff also downgraded their economic forecast for the fourth quarter of 2024, now predicting no growth, compared with the 0.3% expansion predicted in its November report. Money markets this week pared back bets on the pace of further trims next year after the publication of data on inflation and summer wage growth, and are now pricing in roughly 50 basis points of upcoming cuts, down from an outlook of around 70 basis points' worth of cuts on Monda
BANK OF ENGLAND INTEREST RATES INFLATION UK ECONOMY MONETARY POLICY
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