Bank of England joins US Fed in keeping interest rates unchanged after inflation declines

abcnews.go.com:

The Bank of England has paused nearly two years of interest rate increases after a surprising fall in U.K. inflation eased concerns about the pace of price rises

LONDON — The Bank of England on Thursday joined the U.S. Federal Reserve in pausing interest rate increases after a surprising fall in U.K. inflation eased concerns about the pace of price rises.

In a development that few predicted just two days ago, the central bank kept its main interest rate unchanged at a 15-year high of 5.25%. It comes to the relief of millions of homeowners who are facing higher mortgage rates after nearly two years of hikes.

Central banks worldwide appear to be near the end of an aggressive rate-hiking cycle meant to curb an outburst of inflation triggered by the bounceback from the COVID-19 pandemic and Russia’s war in Ukraine. The Fed also left rates unchanged Wednesday.

Clearly influencing the U.K. bank’s decision was news Wednesday that inflation unexpectedly fell to 6.7% in August, its lowest level since Russia invaded Ukraine in February 2022. But it is still way above the bank’s target rate of 2% and higher than in any other Group of Seven major economy.

Bank Gov. Andrew Bailey said the decline in inflation was “welcome” but that the bank stood ready to raise rates again if it didn’t continue to fall as anticipated.

“We’ll be watching closely to see if further increases are needed, and we will need to keep interest rates high enough for long enough to ensure that we get the job done,” he said in a statement.

Four of the nine members of the bank's Monetary Policy Committee voted for a hike.

Higher interest rates, which cool the economy by making it more expensive to borrow and bearing down on spending, have contributed to bringing