Bank of England Holds Fire on Interest Rates Amid Ongoing Inflation Fears

UK Interest Rates Held at 4% as Bank Warns of Continued Inflation Concerns LONDON (AP) - The Bank of England's Monetary Policy Committee (MPC) decided to hold interest rates steady at 4%, despite rising inflation, with Governor Andrew Bailey cautioning that the country "is not out of the woods yet" in terms of price increases. The decision was widely expected by analysts, who had anticipated a pause in rate hikes given the current economic climate. However, the Bank's warning signals continued vigilance on inflation, which has been rising at nearly twice the target rate of 2%. "We're not out of the woods yet," Bailey said in a statement. "We need to be cautious and vigilant about inflation." The MPC had cut interest rates five times since August last year as inflation eased, but since April prices have been increasing again, driven in part by rising food costs. Two members of the nine-member MPC voted to cut rates to 3.75%, but the majority decided to maintain the current rate. The Bank will meet twice more this year to discuss interest rates and any further cuts would depend on economic developments. The decision comes as the global economy grapples with rising inflation, led by the United States, where the Federal Reserve has also been raising interest rates to combat price increases. In Europe, the European Central Bank (ECB) has maintained a dovish stance, but is closely monitoring inflationary pressures. In the UK, the Bank's decision to hold rates steady may be seen as a cautious approach given the current economic uncertainty. The country's economy has been experiencing a slowdown in recent months, with GDP growth slowing to 0.3% in the first quarter of this year. The Bank also announced that it would reduce its holdings of government debt at a slower pace, following weeks of turmoil in financial markets. This move is seen as a sign of the Bank's commitment to maintaining market stability and confidence. Economists say the decision to hold rates steady will have limited impact on consumers, who are already facing rising living costs. "The interest rate decision is unlikely to make much difference to households," said Vicky Redwood, an economist at Capital Economics. "Inflation remains a major concern for policymakers." The Bank's next move will be closely watched by markets and economists, who expect the MPC to continue monitoring inflationary pressures before making any further decisions on interest rates. By holding interest rates steady, the Bank is signaling its continued focus on price stability and caution in the face of economic uncertainty. As Bailey noted, "we're not out of the woods yet," and the Bank will remain vigilant in its efforts to control inflation. *Reporting by Bbc.*