Bank of England Holds Base Rate at 3.75% for Fifth Consecutive Time

The Bank of England (BOE), the central bank of the United Kingdom, has kept its benchmark interest rate unchanged at 3.75% for the fifth consecutive time.

A view of the Bank of England (BOE), the central bank of the United Kingdom. Photo by Reuters Yonhap News Agency

On July 30 (local time), the Bank of England announced that it would hold the base rate steady at 3.75%. Since the 0.25 percentage point cut in December last year, the rate has been kept unchanged throughout this year.

Among the nine members of the Monetary Policy Committee, six supported keeping the rate unchanged, while three argued for a 0.25 percentage point increase. The committee explained, "The three members in favor of tightening were less confident in the underlying disinflation process and placed weight on the fact that inflation has stayed above the 2% target for more than five years."

Andrew Bailey, the Governor of the Bank of England, who supported holding the rate, stated, "Although the global environment is more uncertain and inflationary risks persist, domestic conditions are more stable, providing a balanced outlook, so maintaining rates is appropriate."

At the beginning of the year, markets largely expected a further rate cut from the Bank of England. However, after the war between the U.S. and Iran, expectations shifted toward a rate hike. While deciding to keep the rate steady, the Bank of England pointed to ongoing uncertainty in energy prices and inflation.

The war between the U.S. and Iran, as well as the risk of rising prices, were mentioned once again. The committee stated, "Depending on developments in the Middle East, there remains considerable scope for changes to the (inflation) outlook," adding, "The committee stands ready to take necessary actions to maintain the trajectory towards achieving the 2% CPI inflation target over the medium term."

The previous day, the U.S. Federal Reserve kept its base rate in the range of 3.50% to 3.75%, with Fed Chair Kevin Warsh affirming a firm commitment to price stability. On July 23, the European Central Bank (ECB) also held its deposit rate at 2.25%, while leaving the main refinancing rate and the marginal lending rate unchanged at 2.40% and 2.65%, respectively.

This content was produced with the assistance of AI translation services.