18th Sep 2025 12:21
(Alliance News) - The Bank of England on Thursday voted to hold UK interest rates at 4.00% as expected, amid stubbornly lofty inflation.
Seven members of the nine strong Monetary Policy Committee, including BoE Governor Andrew Bailey, voted to hold interest rates. Bailey was joined by Sarah Breeden, Megan Greene, Clare Lombardelli, Catherine Mann, Huw Pill and Dave Ramsden.
Two MPC members, Swati Dhingra and Alan Taylor, backed a 25 basis point cut.
The committee voted by a majority of 7-2 to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by GBP70 billion over the next 12 months, to a total of GBP488 billion.
Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Dave Ramsden and Alan Taylor voted in favour of the GBP70 billion reduction.
Catherine Mann preferred a reduction of GBP62 billion and Huw Pill voted to maintain the pace of quantitative tightening at GBP100 billion.
The bank said underlying disinflation has "generally continued" but with greater progress in easing wage pressures than prices.
The annual consumer price inflation rate was 3.8% in August, and is expected to increase slightly in September, before falling towards the 2% target thereafter, the bank said.
"The committee remains alert to the risk that this temporary increase in inflation could put additional upward pressure on the wage and price-setting process," it added.
In a statement, the BoE said a "gradual and careful" approach to the further withdrawal of monetary policy restraint remains appropriate.
"The restrictiveness of monetary policy has fallen as bank rate has been reduced. The timing and pace of future reductions in the restrictiveness of policy will depend on the extent to which underlying disinflationary pressures continue to ease."
The BoE added: "Monetary policy is not on a pre-set path, and the committee will remain responsive to the accumulation of evidence."
The UK's central bank cut interest rates in August to 4.00%, after holding in June at 4.25%. It made a 25 basis points cut in May. This followed interest rates cuts in February, and November and August 2024, when the base rate was cut from 5.25%, the first reduction of the cycle.
The pound fell to USD1.3643 on Thursday afternoon, from USD1.3661 at the time of the London equities close on Wednesday. It had traded at USD1.3647 before the BoE decision.
By Michael Hennessey, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.