The Bank of England on Thursday kept its main interest rate unchanged at 5.25% and said monetary policy is « likely to need to be restrictive for an extended period of time. »
The Bank of England on Thursday kept its main interest rate unchanged at 5.25% and said monetary policy is « likely to need to be restrictive for an extended period of time. »
The Monetary Policy Committee voted 6-3 in favor of holding rates steady for a third consecutive meeting. The three dissenting members favored a further 25 basis point hike to 5.5%.
U.K. headline inflation fell to an annual 4.6% in October, its lowest point in two years, while wage growth has also undershot expectations of late but remains uncomfortably high for the central bank, as it looks to bring inflation down towards its 2% target sustainably.
The MPC noted in Thursday’s report that « key indicators of U.K. inflation persistence remain elevated, » although tighter monetary policy is leading to a looser labor market and weighing on activity in the real economy.
Real U.K. GDP was flat in the third quarter, in line with the Monetary Policy Committee’s projections, but the economy unexpectedly shrank by 0.
