Source: AFP
The Bank of England on Thursday kept its key interest rate at a 16-year high, opting against a cut as inflation remains high despite recent slowdowns.
However, BoE Governor Andrew Bailey has signaled a rate cut later this year as inflationary pressures ease further.
The Bank of England kept its key interest rate steady at 5.25%, mirroring a similar decision by the US Federal Reserve on Wednesday.
The BoE rate cut came a day after official data showed annual UK inflation slowed more than expected, fueling speculation it will start cutting borrowing costs in the summer.
Inflation hit a nearly 2.5-year low of 3.4% in February.
That marked a slowdown from 4.0 percent in January and beat economists’ expectations of 3.5 percent, but remains stubbornly above the BoE’s official target level of two percent.
![](https://images.yen.com.gh/images/6852baf7cb48634a.jpg?impolicy=cropped-image&imwidth=256)
![](https://images.yen.com.gh/images/6852baf7cb48634a.jpg?impolicy=cropped-image&imwidth=256)
Read also
US home sales rise in February by the most in a year
“In recent weeks we have seen further encouraging signs that inflation is easing,” Bailey said in statements released with the decision.
“We kept interest rates on hold again today at 5.25 percent because we need to be confident that inflation will fall back to our target of 2.0 percent and stay there.
“We’re not yet at the point where we can cut rates, but things are moving in the right direction.”
At 5.25%, the key rate is the highest level since February 2008, hurting borrowers but boosting savers.
A slowdown in inflation in February and the prospect of interest rate cuts may give embattled British Prime Minister Rishi Sunak and his Conservative party a boost as they face the prospect of losing a general election this year amid a cost-of-living crisis.
High interest rates have exacerbated the squeeze for both individuals and businesses as commercial lenders impose their own rates on loans, including mortgages.
![](https://images.yen.com.gh/images/c2fe7f8e3c715844.jpg?impolicy=cropped-image&imwidth=256)
![](https://images.yen.com.gh/images/c2fe7f8e3c715844.jpg?impolicy=cropped-image&imwidth=256)
Read also
The Bank of England will keep interest rates on hold despite slowing inflation
Meanwhile, Britain slipped into a technical recession in the second half of last year, but saw little growth in January.
Adding to the mix, UK government borrowing forecasts were exceeded in February, according to separate official data on Thursday.
The Sunak administration earlier this month announced a tax cut for millions of workers as it tries to win over voters.
But a new poll on Thursday showed support for Britain’s ruling Conservatives has fallen to a level last seen during former leader Liz Truss’s brief premiership.
The poll of more than 2,000 adults, carried out by YouGov this week, has Sunak’s Tories on just 19 per cent, well behind the main opposition Labor Party on 44 per cent.
“Downing Street will be hoping for rate cuts sooner rather than later,” noted Leith Halaf, head of investment analysis at brokerage AJ Bell.
“Whether lower mortgage rates will shift the electoral calculus is questionable, but they can’t hurt.”
Source: AFP