BOE holds rates at 4% reflecting mixed economic data and budget uncertainty
Investment Economy
The Bank of England’s Monetary Policy Committee (MPC) kept interest rates steady at 4.0% again today, in line with investor expectations. The slimmest of majorities supported no change with a voting split of 5–4, with those in the minority all backing a 0.25% cut to 3.75%.
Chris Helyar, Partner in LCP’s Investment team, commented:
“The Bank of England’s decision to hold rates at 4.0% highlights the delicate balance the MPC faces between above-target inflation and growing signs of economic weakness. Headline CPI inflation remained elevated at 3.8% in September, even as the labour market softens and unemployment rose to 4.8% over the quarter to August.”
He added:
“By keeping rates unchanged at 4.0%, the MPC has opted for caution amid mixed signals. With Chancellor Rachel Reeves expected to unveil a tighter fiscal stance later this month, the MPC will likely reassess the case for further rate cuts in December. Today’s pause reflects the need to weigh up the opposing signals coming from inflation and growth as well as Budget uncertainty.”
