The Bank of England decided to keep its key interest rate for the second time in a row at 5.25%, after the conclusion of its monetary policy meeting on Thursday. The Bank of England's decision was in line with analysts' expectations.
According to the minutes of the meeting, six of the nine monetary policy managers voted in favor of maintaining the base interest rate. The other three authorities at the Bank of England defended a 25 basis point increase in the rate, to 5.5%.
Bank of England President Andrew Bailey said it was “too early” to consider the possibility of cutting interest rates. The base interest rate should remain at restricted levels for an “extended period of time.”
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The Bank of England also warned, in a statement, that “further monetary policy tightening will be necessary if there is evidence of further persistent inflationary pressures.”
BC has revised down its forecast for the UK economy next year. Now, it expects a recession in 2024, when it indicated growth of 0.5% in August. The organization published an updated forecast this Thursday.
For this year, the Bank of England expects the country's GDP to be stable in the third quarter, with an increase of just 0.1% in the fourth quarter. The Bank of England also expects UK GDP to grow just 0.1% in the fourth quarter of this year.
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In the case of the CPI, it expects inflation to return to the 2% target by the end of 2025. Over the course of the current year, the Bank of British Columbia expects inflation in the country to be “around 4.5%,” but says the risks to its forecast are high. The Central Bank expects inflation to reach 47% in the fourth quarter of this year, 4.50% in the first quarter of 2024, and 3.75% in the second quarter of 2024.
