The central bank's Monetary Policy Committee voted to hold interest rates at 5.25%.
The central bank's Monetary Policy Committee voted 6-3 to hold interest rates steady, with the minority voting to raise rates by 25bps.
While inflation has fallen sharply from its peak of 11.1% in October 2022, it still sits at over twice the BoE's 2% target, at 4.6%. The MPC said key indicators of UK inflation persistence «remain elevated» and is expected to remain near to its current rate «around the turn of the year».
«In particular, services price inflation is projected to increase temporarily in January, related to base effects from unusually weak price movements at the start of this year, before starting to fall back gradually thereafter,» it explained.
Bank of England sets out 'near-final' plans to tighten capital rules for UK banks
The central bank did reduce its inflation expectations for the rest of 2024, due in part to recent declines in energy prices.
The BoE forecasted modal inflation will remain above its 2% target until the end of 2025, where it will then fall below target. However, the MPC noted that inflation predictions were skewed to the upside, meaning mean inflation projections for the end of 2025 sat at 2.2%.
Despite expectations that inflation will remain high for the next two years, the poor economic performance of the UK is also weighing on the MPC's mind, following data yesterday revealing UK GDP had fallen by 0.3% in October, leaving Q3 growth flat.
«Based on the latest official and survey data, Bank staff expect GDP growth to be broadly flat in Q4 and over coming quarters,» the committee said.
It added that fiscal measures introduced in last month's Autumn Statement were estimated to increase GDP by about
Read more on investmentweek.co.uk