The Strategist

The Bank of England keeps interest rate at 5.25% per annum

05/10/2024 - 04:17

The Bank of England maintained the basic interest rate at 5.25% annually while consumer prices rise reached 6% in March in the UK.

Katie Chan
Katie Chan
The notification posted on the regulator's website indicates that the Bank of England maintained the basic interest rate at 5.25% annually. Two members of the Monetary Policy Committee (MPC) supported lowering the rate by 0.25 percentage points, to 5%, while the majority of MPC members voted in favor of this move.

In a statement, the watchdog said that the MPC maintains employment and economic growth by setting monetary policy in a way that is compatible with the 2% inflation target.

According to the Bank of England, consumer price increase for services fell in March but stayed high at 6%. The regulator projects that in 2026 and 2027, the percentage will drop to 1.9% and 1.6%, respectively. 

In addition, following a somewhat negative year-over-year decline, the UK GDP is predicted to grow by 0.2% in the second quarter of 2024 and by 0.4% in the first. The regulator forecasts that a decline in economic activity will start in 2024 and continue through 2025. The Central Bank clarified that this is partially due to the monetary policy's ongoing restrictions.