The Bank of England has kept interest rates at a 16-year high for at least another month, as governor Andrew Bailey said Threadneedle Street would not bow to political pressure to cut rates.
The BoE’s Monetary Policy Committee (MPC), announced its latest decision at midday on Thursday, opting to keep the current rate of 5.25 per cent – set last August – in a blow to those hoping for the first reduction since 2020.
High interest rates have saddled homeowners with soaring mortgage repayment costs, and are used as a tool to help bring down inflation.
While the rate of Consumer Prices Index (CPI) inflation fell to 3.2 per cent in March, experts had suggested that two key economic indicators – pay growth and services sector inflation – have remained more stubborn.
In positive news, the Bank improved its forecasts on Thursday to predict that CPI inflation would fall to 2.25 per cent next year and to 1.5 per cent in 2026, and said it expected the UK economy to grow by 0.5 per cent this year and 1 per cent in 2025 – slightly higher than previous predictions.