Breaking: Bank Of England Maintains 5.25% Interest Rate

The Bank of England has left its interest rate unchanged at 5.25%, a day after inflation unexpectedly fell by more than expected.

The Bank’s monetary policy committee (MPC) voted 5-4 – the narrowest possible margin – to leave the cost of borrowing unchanged.

Up until the inflation data was released on Wednesday morning, markets had put an 80% probability on them raising the rate by a further quarter percentage point.

By this morning, that probability had sunk to just below 50%.

The decision brings to an end the longest successive period of “tightening” (a lift in the cost of borrowing) in recent Bank of England history – as the MPC raised rates in 14 successive meetings.

The last time the MPC voted to leave interest rates unchanged was in November 2021.

However, the fact that four members – Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann – voted to raise the cost of borrowing might be seen as a signal that in the coming months the Bank may lift rates again.

The Bank also voted to continue its programme of reversing quantitative easing – the scheme whereby it creates money to buy government bonds and pump cash into the economy.

Details later…