The Bank has warned of a 50% chance of a recession by next summer.
The Bank of England has maintained the UK interest rates at 5.25%, a 15-year high.
The Bank's Monetary Policy Committee is dealing with an inflation rate more than double that of the euro zone and almost twice the U.S. rate.
The Bank of England (BoE) has decided to maintain the UK interest rates at 5.25%, a 15-year high, for the second consecutive meeting. This decision comes in the wake of 14 increases in borrowing costs from December 2021 to August 2023, as the Bank attempted to control inflation. The Bank's Monetary Policy Committee is adhering to the 'Table Mountain' approach to combat inflation, which involves maintaining high borrowing costs.
The BoE is dealing with an inflation rate more than double that of the euro zone and almost twice the U.S. rate. However, recent data shows that inflation has fallen from 11.1% to 6.7%. Despite the decrease, the Bank has warned of a 50% chance of a recession by next summer, predicting no growth for the economy in 2024 and a rise in unemployment to just above 5% by the start of 2025.
Borrowing costs are expected to remain elevated, especially if oil and gas prices increase sharply due to the ongoing conflict between Israel and Hamas. Three of the nine members of the policy committee supported a quarter-point increase to 5.5% to push down harder on the inflation rate. However, the majority decision was to keep the rate unchanged.
The decision to maintain the interest rate comes amidst various other top stories, including Uber and Lyft agreeing to pay a combined $328 million for withholding money from drivers, and the ongoing Trump fraud trial.