BoE keeps main interest rate on hold at 5% despite Fed rate cut

London: The Bank of England (BoE) has kept its main interest rate unchanged at 5 per cent despite a big cut from the US Federal Reserve, its first since the onset of the coronavirus pandemic more than four years ago.

The decision Thursday was widely expected amid ongoing concerns about inflation within the bank’s monetary policy committee, particularly the elevated levels in the crucial services sector, which accounts for around 80 per cent of the British economy.

Figures on Wednesday showed that inflation overall in the UK held steady at an annual rate of 2.2 per cent in August, still above the bank’s goal.

The bank, which last month cut interest rates for the first time since the pandemic, is widely expected to reduce borrowing costs again at its next meeting in November, especially as it will have details of the government’s budget on Oct 30.

On Wednesday, the Fed cut its main interest by half of a percentage point to roughly 4.8 per cent from a two-decade high of 5.3 per cent, where it had stood for 14 months. It also signalled that there will be more cuts to come in the next few months.