A blurry bus passes the Bank of England in the City of London on February 7, 2024 in London, England.
Mike Camp | In Pictures | Getty Images
LONDON – The Bank of England kept interest rates steady at 5.25% on Thursday but signaled a rate cut may be in the cards as inflation falls faster than expected.
The Monetary Policy Committee voted 8 to 1 to keep interest rates steady, with one member voting to cut interest rates by 25 basis points to 5%. Notably, for the first time this cycle, no member voted for a further rate hike, after two members voted in favor of a quarter-percentage point hike at the last meeting.
Data on Wednesday showed that overall inflation fell more than expected in February to an annual rate of 3.4%, hitting the lowest level since September 2021.
With the cap on household energy prices cut again in April, the central bank expects consumer prices to return to its 2% target in the second quarter.
The UK economy slipped into a technical recession in the last quarter of 2023 and has endured two years of stagnation, meaning the Bank of England is treading a precarious balance between keeping inflation back up to 2% and avoiding a prolonged downturn. action.
After two years of rapid tightening, the world’s major central banks are trying to determine when to start easing monetary policy to stem soaring global inflation.
The Federal Reserve kept interest rates steady on Wednesday and stuck to its forecast of three rate cuts this year, as Chairman Jerome Powell sought confirmation that inflation will return to its 2% target despite a recent string of higher-than-expected data.
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