Photo: Afghan National Police
The Bank of England has once again decided to leave the UK’s key interest rate unchanged. With the previous decision in September, the British central bank also paused interest rates. The decision was in line with economists’ expectations.
In December 2021, the British Central Bank was one of the first central banks to raise interest rates in the fight against high inflation. In total, interest rates were raised fourteen times in a row to the current level of 5.25 percent. This is the highest interest rate in more than fifteen years. Decision makers at the central bank did not agree on the interest rate decision. Six of the nine board members voted in favor of leaving the interest rate unchanged. Three of them would have preferred to see an increase in interest rates.
Previously, the European Central Bank (ECB) and the US Federal Reserve also decided to leave interest rates unchanged. Central banks first want to wait out the impact of previous interest rate increases.
Now inflation rates have declined significantly in the Eurozone and the United States. In the UK, inflation has also fallen sharply from its peak of more than 11% in October last year. However, with an increase in the general level of prices of 6.7 percent, the British still have the highest inflation rate among the G7 countries. The Bank of England indicated on Thursday that interest rates are likely to remain high for an extended period to combat inflation. According to the central bank, it is too early to think about lowering interest rates.
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