Bank of England unexpectedly leaves policy rate unchanged

By Tuba Ongun

The Bank of England on Thursday kept its key policy rate steady, pausing its monetary tightening cycle in nearly two years.

The policy interest rate was held constant at a 15-year high of 5.25%, following softer than expected inflation and labor data.

The market had forecast a 25-basis point hike.

"There are increasing signs of some impact of tighter monetary policy on the labor market and on momentum in the real economy more generally," the Bank of England said in a statement.

In its last meeting in August, the bank raised its base rate by a further 0.25 percentage points, marking the 14th consecutive rate hike.

The Monetary Policy Committee voted 5-4 in favor of leaving rates unchanged, with the four members voting for another 25 basis points rise.

The UK's annual consumer inflation dropped for the sixth consecutive month to 6.7% in August.

"CPI inflation is expected to fall significantly further in the near term, reflecting lower annual energy inflation, despite the renewed upward pressure from oil prices, and further declines in food and core goods price inflation," the bank said.