\n<\/p>\n
A person shields themselves from the rain while walking near the Bank of England building on the day the Monetary Policy Committee lowered interest rates, in London, Britain, Dec.18, 2025. <\/p>\n
Toby Melville | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The Bank of England held U.K. interest rates at 3.75% on Thursday, as policymakers continue to balance the need to address above-target inflation with lackluster economic output. <\/p>\n
The hold, which was in-line with the expectations of economists polled by Reuters, was backed by seven of the nine monetary policy committee members in the BOE’s May meeting. <\/p>\n
It comes as higher energy costs in the wake of the Iran war have pushed inflation higher in economies across the globe, and the U.K. \u2014 a net energy importer \u2014 is particularly vulnerable to price shocks. <\/p>\n
The U.K.’s own inflation rate held<\/a> at a cooler-than-expected 2.8% in May, with price rises driven by rising transportation fuel costs, while data published last week showed the economy shrank<\/a> by 0.1% in April. But despite Washington and Tehran reaching a breakthrough in peace negotiations, markets are still betting that the Bank of England will raise rates by the end of the year, according to LSEG figures. <\/p>\n At its April meeting, the Bank of England’s Monetary Policy Committee voted<\/a> to keep its key interest rate at 3.75%.<\/p>\n Ahead of the meeting, LSEG data showed traders were pricing in a 96% chance of the central bank keeping its key rate unchanged. <\/p>\n<\/div>\n It comes after the Federal Reserve also opted to keep U.S. interest rates on hold, with the federal funds rate maintained at 3.5%-3.75%, as expected. However, investors were unnerved by Kevin Warsh’s first meeting as Fed chair, with major averages swooning in response to some hawkish signals.<\/p>\n Last week, the European Central Bank became the first major central bank to raise<\/a> its key interest rate in response to the energy crisis brought on by the Iran war. The Bank of Japan followed<\/a> on Tuesday, lifting its policy rate to a 31-year high of 1%. <\/p>\n This is breaking news. Please refresh for updates.<\/strong><\/p>\n<\/div>\n
Inflation cooled<\/a> to 2.8% in April, but the drop \u2014 attributed to a change to the U.K.’s regulated energy price cap \u2014 was expected to be short-lived. The price cap is due<\/a> to rise by 13% later this summer, when energy costs will hit a 2-year high.<\/p>\nCentral banks confront inflation <\/h2>\n
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