Bank of England keeps policy rate constant

By Gokhan Ergocun

ISTANBUL (AA) - The Bank of England kept its policy interest rate constant at 5% on Thursday, in line with market expectations.

The bank’s monetary policy committee voted by an 8-1 majority to keep the rate unchanged.

"The Committee voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion ($133 billion) over the next 12 months, to a total of £558 billion," it added.

The bank underlined that its decisions were guided by the need to squeeze persistent inflationary pressures out of the system to bring annual inflation down to 2%.

The bank said headline GDP growth is expected to return to its underlying pace of around 0.3% per quarter in the second half of the year.

Annual inflation was 2.2% in August, and is expected to increase to around 2.5% towards the end of this year as declines in energy prices last year fall out of the annual comparison, the bank said.

From December 2021 to August 2023, the bank raised the rate from 0.1% to 5.25% and lowered the rate to 5% at its meeting this August.