Marking the fourth consecutive time interest rates have been frozen, the bank shared its decision on Thursday 1 February, adding it had been made in a bid to meet its 2% inflation target “in a way that helps to sustain growth and employment”.
The Monetary Policy Summary (MPC) voted on Wednesday 31 January, with 6-3 in favour of holding the base rate while two voted for a 0.25 percentage point increase and one member preferred to reduce the rate to 5%.
Huge forecast change
In addition, the institution detailed it expected CPI Inflation to “temporarily fall” to the 2% target in Q2 2024 before increasing again during the following two quarters of the year, “reflecting the persistence of domestic inflationary pressures”.
Reacting to the update, UKHospitality (UKH) chief executive Kate Nicholls shared on X that businesses and households would need to see the “huge forecast change” reflected in interest rates moving forward to “give confidence and drive growth”.
Though the bank also stated monetary policy would need to “remain restrictive for sufficiently long” in order to sustainably reach inflation targets.
In a press conference following the announcement earlier today, BoE Governor Andrew Bailey said: "Inflation has fallen a long way from 10% a year ago to 4% now - things are moving in the right direction.”
However, he added the figures were “not yet at the point where we can lower interest rates”.
"If we were to keep [the] bank rate at 5.25% for the next three years, we think it's likely that inflation would eventually fall significantly below target”, he continued.
Last month, figures from the Office for National Statistics (ONS) revealed the headline rate of inflation had risen 4% in the 12-months to December 2023, up from 3.9% in November last year.
The numbers also marked the first time the Consumer Prices Index (CPI) had increased year-on-year since February 2023.