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Financial News: Bank Of England Keeps Rate On Hold For

Bank Of England Keeps Rate On Hold For Fifth Time

03/21/2024 - 09:42:00 (RTTNews)

(RTTNews) - The Bank of England maintained its key policy rate for the fifth straight session on Thursday, with no members seeking a hike as inflation is expected to ease faster than expected. The Monetary Policy Committee, led by Governor Andrew Bailey, voted 8-1 to keep the bank rate unchanged at 5.25 percent. No members called for a tightening this time.

The current bank rate is the highest since early 2008.

Swati Dhingra sought a quarter point reduction to 5.00 percent. The policymaker assessed that waiting for more reassurance before reducing Bank Rate would weigh further on living standards and supply capacity. Policymakers said the MPC remained prepared to adjust monetary policy as warranted by economic data to return inflation to the 2 percent target sustainably.

".the Committee would keep under review for how long Bank Rate should be maintained at its current level," the central bank said.

The MPC stuck to its stance saying that monetary policy will need to remain restrictive for sufficiently long. The BoE's status quo decision came after the <a href=https://www.rttnews.com/3433628/fed-leaves-rates-unchanged-still-needs-greater-confidence-inflation-is-slowing.aspx target=_blank >US Federal Reserve</a> retained its policy rate on Wednesday.

In Europe, the <a href=https://www.rttnews.com/3433909/switzerland-s-central-bank-unexpectedly-cuts-policy-rate.aspx target=_blank >Swiss National Bank</a> surprised markets earlier on Thursday with an unexpected interest rate cut. The SNB had lowered the policy rate by a quarter-point.

UK inflation has fallen to a near two-and-a-half year low of 3.4 percent in February on easing food price inflation.

The BoE projected CPI inflation to fall slightly below the 2 percent target in the second quarter of 2024, marginally weaker than previously expected owing to the freeze in fuel duty announced in the Budget.

Capital Economics' economist Ruth Gregory said inflation will fall further and faster than the BoE expects and this will change the central bank's tune in the coming months. The economist forecast the apex bank to cut the rate in June and the rate to fall to 3.00 percent next year.

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