Bank of England Holds Interest Rates, Hints at Future Cuts
The Bank of England held UK interest rates steady at 3.75% on Thursday, but signaled that future cuts are likely, according to BBC Business. The decision followed a split vote of the decision-making committee, with five members voting to hold and four voting to cut rates.
Economists had not anticipated a rate cut after borrowing rates were reduced in December, and against a mixed economic backdrop, BBC Business reported. Governor Andrew Bailey told the BBC that there was likely to be "some further reduction" in rates later this year.
The Bank also lowered its prediction for economic growth this year and raised its forecast for unemployment, expectations which make further rate cuts more likely, according to BBC Business. Bailey cautioned that rates were not expected to fall back to the lows seen at the start of the pandemic, which were the "product of exceptional circumstances."
Dharshini David, Deputy economics editor at BBC Business, noted that while the Bank hinted at rate cuts, borrowers should not expect mortgage deals similar to those offered during the Covid-19 pandemic. The Bank's primary objective is to bring inflation down to its 2% target and maintain it at or slightly below that level over the next couple of years, with subdued growth expected, according to BBC Business.
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