Bank of England leaves policy unchanged, says rates to stay high for 'extended period'
LONDON — The Bank of England on Thursday kept its main interest rate unchanged at 5.25% and said monetary policy is «likely to need to be restrictive for an extended period of time.»
The Monetary Policy Committee voted 6-3 in favor of holding rates steady for a third consecutive meeting. The three dissenting members favored a further 25 basis point hike to 5.5%.
U.K. headline inflation fell to an annual 4.6% in October, its lowest point in two years, while wage growth has also undershot expectations of late but at more than 7% still remains uncomfortably high for the central bank, as it looks to bring inflation down toward its 2% target sustainably.
The MPC noted in Thursday's report that «key indicators of U.K. inflation persistence remain elevated,» although tighter monetary policy is leading to a looser labor market and weighing on activity in the real economy.
Real U.K. GDP was flat in the third quarter, in line with the Monetary Policy Committee's projections, but the economy unexpectedly shrank by 0.3% month on month in October.
The central bank ended a run of 14 straight hikes in September, after lifting its benchmark rate from 0.1% to a 15-year high of 5.25% between December 2021 and August 2023.
The U.S. Federal Reserve on Wednesday revealed that policymakers were penciling in at least three interest rate cuts in 2024, offering a dovish surprise that sent global stock markets surging.
However, the MPC once again pushed back against market expectations, reiterating that rates will need to stay in restrictive territory for an extended period of time in order to return inflation to target over the medium term.
«As illustrated by the November Monetary Policy Report projections, the Committee continues to judge that
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