Bank of England. Picture courtesy of Wikipedia

 

UK interest rates remain at 4% as the Bank of England signals ongoing inflation worries. Governor Andrew Bailey cautioned that the economy is "not out of the woods" with inflation still a pressing concern. This decision comes as inflation continues to hover around double the Bank's 2% target.

 

Recently, the Bank has reduced interest rates five times since last August, responding to easing inflation. However, since April, inflation has increased again, partly due to rising food costs. Despite this, only two members of the Monetary Policy Committee voted for a rate cut this time, with the Committee set to meet twice more this year.

 

Mr. Bailey noted that any potential rate cuts would be cautious, emphasising the uncertainty around timing and scale. Alongside the rate decision, the Bank announced a reduction in its government debt holdings at a slower pace, following financial market turbulence. At its peak, the Bank held £875bn of bonds, now reducing its debt by £70bn a year down from £100bn.

 

Upcoming financial developments include Chancellor Rachel Reeves' Budget announcement on 26 November. With the cost of debt servicing rising, it limits her flexibility on tax and spending policies. The Bank's outlook remains cautious with "downbeat" business sentiment amid Budget uncertainties.

 

Fresh data indicates overall price inflation was at 3.8% annually by August, although food and drink prices increased by 5.1%. Prices for services have also changed.limbed, with businesses pointing to higher labour and food costs. Meanwhile, consumer spending lags in sectors like hotels and tourism, despite demand spikes around events such as Oasis concerts.

 

Shadow chancellor Sir Mel Stride criticised Labour policies for the slow decrease in rates, attributing it to increased inflation. As the year progresses, the Bank will closely watch economic indicators and business feedback before adjusting policies further.

 

Key Takeaways:

 

• UK interest rates held at 4% amid inflation concerns.
• Ongoing gradual bond reduction from £100bn to £70bn yearly.
• The economic focus shifts to the upcoming Budget announcement.

 

Related Story:

 

Bank of England's Big Decision: Interest Rate Slash Predicted

 

 

  Adapted by ASEAN Now from BBC 2025-09-19

 

 

2 hours ago, webfact said:

The economic focus shifts to the upcoming Budget announcement.

 

Reeves next budget will be her last.

 

That's the only reason Starmer hasn't removed her yet.

 

Let her deliver the bad news, take the flak for a few weeks, then blame and sack her. Dead (wo)man walking.

 

Quote

UK Interest Rates Steady at 4%

 

 

Cannot say the same for Government borrowing.

 

August borrowing at £18 Bn, which is £6 Bn above forecast.

 

 £6 Bn black hole for August alone. The November Budget is going to be epic.