21 March: Rate-Setters Want More Evidence Inflation Is Beaten
The Bank of England has kept the Bank Rate at 5.25%, leaving UK borrowing costs unchanged for the fifth consecutive time since August last year, writes Andrew Michael.
Its Monetary Policy Committee voted by eight votes to one to hold the Bank Rate at its 16-year high, with the one dissenting voice, Swati Dhingra, favouring a rate reduction of a quarter of a percentage point to 5%.
Today’s announcement echoes last night’s decision by the Federal Reserve, the US central bank, which also chose to maintain interest rates at their existing level (see story below).
Along with other central banks, the Bank of England is required to maintain inflation at 2% over the medium to long-term.
In a bid to head off soaring inflation levels that beset the UK economy through 2022 and much of last year, the Bank raised borrowing costs 14 times in a row between December 2021 and August last year, in the most aggressive round of monetary policy tightening since the 1980s.
Despite yesterday’s official figures which recorded a sharp fall in annual inflation to 3.4% in February, from 4% a month earlier, the Bank has continued to tread a cautious path in terms of its monetary policy decisions.
Explaining today’s decision, the Bank said: “Headline consumer price index inflation has continued to fall back relatively sharply in part owing to base effects and external effects from energy and…
