The Bank of England has kept intere t rate on hold after policymaker signalled that the recent rise in inflation has peaked. The Monetary Policy Committee (MPC) voted to maintain the Bank Rate at 4% by a margin of five vote to four in a decision which economi t had warned would be a “close call”.
It come as official figure showed inflation came in lower than expected in September at 3.8%. However, the figure remain nearly double the Bank of England’s 2% target. In the minute accompanying the Bank’s decision, it said inflation “is judged to have peaked”. Chancellor Rachel Reeve said she would make lowering inflation a centrepiece of her Budget later this month.
The Bank’s decision break a cycle of cutting rate by a quarter of a percentage point at every other meeting since Augu t 2024. While the MPC voted to keep rate on hold, the Bank signalled its readine to cut further, removing the word “careful” from its language around future rate reductions.
Governor Andrew Bailey said policymaker need to see more data on inflation before deciding it is under control, warning “we need to see more than one number to establish that is in the picture”. He also cautioned that “market could overprice the return ” offered by artificial intelligence, raising the risk of an AI bubble.
Overall, the Bank’s decision reflects a finely balanced judgment, with the MPC deeply divided on the appropriate path for monetary policy. While inflation may have peaked, the outlook remains uncertain, particularly with the Chancellor’s Budget looming large on the horizon.