The Bank of England held its key interest rate at 5.25% at the MPC’s September meeting. MPC members voted by five to four in favour of no change, ending a run of fourteen consecutive rises that began in December 2021.
- US and UK rates remained unchanged in September
- UK growth is set to be weaker than expected in H2
- The ECB raised rates by 25bp
The Bank of England held its key interest rate at 5.25% at the Monetary Policy Committee’s (MPC’s) September meeting. MPC members voted by five to four in favour of no change, ending a run of fourteen consecutive rises that began in December 2021. The central bank expects underlying growth in the second half of this year to be slightly weaker than expected. Meanwhile, inflation is expected “to fall significantly further” in the short term. The rate of consumer price inflation in the UK edged unexpectedly lower in August to 6.7%.
“The ECB indicated that it was likely to pause its tightening action for now”
In the US, the Federal Reserve (Fed) left its key rate unchanged at a range of 5.25% to 5.5%. Nevertheless, policymakers are widely expected to tighten again before the end of the year. Inflationary pressures have moderated in the US, falling from an annualised rate of 6.5% at the end of 2022 to 3.7% in August
Interest rates in the eurozone were raised earlier this month from 3.75% to 4%. As the European Central Bank (ECB) maintained its hawkish stance towards inflation. The central bank warned that inflation is expected to “remain too high for too long” and is likely to average 5.6% over 2023 as a whole, falling to 3.2% in 2024 and 2.1% in 2005. Nevertheless, the ECB indicated that it was likely to pause its tightening action for now, although, although any prospect of cuts appears unlikely for some time to come.
