The Bank of England has elected to hold interest rates at current levels as inflation remains sticky and the economic outlook grows increasingly cloudy.
The British central bank voted 7-2 to keep its benchmark interest rate at its current level of 4%. The Bank of England preciously cut interest rates by 25-basis points in August.
Economists had widely expected the central bank to hold rates at current levels.
The latest decision comes after data showed that inflation across the United Kingdom (U.K.) remains elevated at an annualized rate of 3.8%, which is above the central bank’s 2% target.
Core inflation, which excludes volatile energy, food, alcohol and tobacco prices, climbed by an annual 3.6% in August. The annual rate of services inflation was at 4.7% in August.
The Bank of England has forecast that inflation has now likely peaked and should retreat throughout 2026.
The British central bank continues to state that it will take a “gradual and careful” approach to monetary policy.
The decision to hold interest rates at current levels comes a day after both the Bank of Canada and the U.S. Federal Reserve lowered interest rates by 25-basis points amid signs of an economic slowdown in each country.
The Bank of England has two more interest rate decisions scheduled for this year, on November 6 and December 18.
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