Bank of England halts run of interest rate hikes as economy slows
Bank of England halted its long run of interest rate increases on Thursday as the British economy slowed, but it said it was not taking a recent fall in inflation for granted.
A day after a surprise slowing in Britain's fast pace of price growth, the BoE's Monetary Policy Committee voted by a narrow margin of 5-4 to keep Bank Rate at 5.25%.
Four members — Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann — voted to raise rates to 5.5%.
It was the first time since December 2021 that the BoE did not increase borrowing costs.
«There are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally,» the MPC said in a statement.
It cut its forecast for economic growth in the July-September period to just 0.1% from August's forecast of 0.4% and noted clear signs of weakness in the housing market.
Growth for the rest of the year was likely to be weaker than previous forecasts, the BoE said.
Record growth in workers' pay, which has been a big concern for the central bank, was not backed up by other measures of the labour market, it noted, suggesting the BoE's policymakers expected it to slow down soon.
«CPI inflation is expected to fall significantly further in the near term, reflecting lower annual energy inflation, despite the renewed upward pressure from oil prices,» the BoE said.
But it said services inflation was expected to remain elevated.
The BoE's decision to pause its rate hikes came a day after the U.S. Federal Reserve also opted to keep borrowing costs on hold.
