The Bank of England, serving as the central bank of the United Kingdom, has kept the base rate at 3.75% for the sixth consecutive time. This decision means that the cost of borrowing for banks, companies, and households remains unchanged for several meetings in a row. Meanwhile, the annual inflation in the country reaches 3.1% – significantly above the target level of 2%, which the regulator is obliged to maintain.
The decision was made by the Monetary Policy Committee – the body within the Bank of England responsible for the interest rate. The votes were split 6–3: the majority favored maintaining the current level, while three committee members advocated for an increase to 4%. This division indicates that there is no unified position within the regulator.
Bank of England Governor Andrew Bailey noted that prolonged volatility in energy prices increases the likelihood of a rate hike in the future. Energy prices are one of the key factors influencing inflation: when the prices of oil, gas, and electricity fluctuate, it reflects on the cost of goods and services across the economy. This is why the regulator monitors this market particularly closely.
Separately, the Bank of England has suspended auctions on the remaining portfolio of government bonds worth £488 billion. This refers to securities that the regulator has accumulated over years of quantitative easing. The suspension of auctions means that the Bank of England is temporarily not selling these bonds in the market, keeping them on its balance sheet.
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