Bank of England Keeps Rates Steady

2026-02-05 12:02 By Agna Gabriel 1 min. read

The Bank of England kept its Bank Rate unchanged at 3.75% in February, with a narrow 5 to 4 vote, as policymakers balanced easing inflation pressures against risks from a weakening economy.

Four members supported a 25 basis point cut, highlighting growing divisions within the Monetary Policy Committee.

Inflation remains above the 2% target but is expected to fall back to around that level from April due partly to energy price developments.

Pay growth and services inflation have continued to ease, reflecting subdued economic growth and rising slack in the labour market.

Policymakers noted that risks of persistent inflation have diminished, while weaker demand and a softening jobs market pose downside risks.

Bank Rate has already been reduced by 150 basis points since August 2024, lowering policy restrictiveness.

The committee signalled that further rate cuts are likely but will depend on incoming inflation data, with future decisions expected to be finely balanced.



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Bank of England Keeps Rates Steady
The Bank of England kept its Bank Rate unchanged at 3.75% in February, with a narrow 5 to 4 vote, as policymakers balanced easing inflation pressures against risks from a weakening economy. Four members supported a 25 basis point cut, highlighting growing divisions within the Monetary Policy Committee. Inflation remains above the 2% target but is expected to fall back to around that level from April due partly to energy price developments. Pay growth and services inflation have continued to ease, reflecting subdued economic growth and rising slack in the labour market. Policymakers noted that risks of persistent inflation have diminished, while weaker demand and a softening jobs market pose downside risks. Bank Rate has already been reduced by 150 basis points since August 2024, lowering policy restrictiveness. The committee signalled that further rate cuts are likely but will depend on incoming inflation data, with future decisions expected to be finely balanced.
2026-02-05
Bank of England to Keep Rates Steady
The Bank of England is expected to keep interest rates unchanged at 3.75% on Thursday, as policymakers wait for clearer evidence that inflation is under control despite growing concern about the labor market. Markets see less than a 1% chance of a rate cut and most economists expect a 7 to 2 vote to hold, with only Alan Taylor and Swati Dhingra likely to support a reduction. Inflation remains elevated at 3.4% but is forecast to fall to the 2% target in the second quarter, keeping hawkish members cautious. At the same time, unemployment has risen to 5.1% and redundancies have increased, raising concerns about economic weakness. Recent data has been mixed, with stronger GDP growth, solid retail sales and improving business activity offset by labor market deterioration. Governor Andrew Bailey is expected to back a hold while signalling further gradual easing ahead, with markets pricing about a 70% chance of the next rate cut in April.
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