The Bank of England, in what is quickly becoming its favourite pastime, has once again voted to hold interest rates steady at 5.25 percent, leaving borrowers, savers and overly caffeinated economists collectively squinting at the tea leaves for some hint of future movement.
The decision, announced Thursday, marks the sixth consecutive time Threadneedle Street has opted for a firm “let’s sit on our hands” approach since rates last rose in August 2023. Unlike some of its more adventurous international counterparts, the Bank is apparently committed to a strategy of cautious observation mixed with light anxiety and the occasional spreadsheet recalibration.
Andrew Bailey, Governor and chief worrier-in-chief, reiterated that while inflation has come down significantly, the Bank is still not quite ready to uncork the champagne and declare victory. “We need to see more evidence that inflation is set to fall all the way to the 2 percent target,” he said, presumably with a stiff upper lip and a well-thumbed copy of economic indicators in hand.
Inflation currently sits at 3.2 percent, which is undoubtedly better than the scorched-earth levels seen in 2022 and 2023 but still discouraging enough to keep Bailey and co. perched warily on their monetary fence. The Bank’s own forecast suggests inflation might briefly flirt with the target in the next few months before getting cold feet and drifting slightly back up later in the year. A brief visit, perhaps, rather than a permanent relocation.
For households and businesses, the decision means another few weeks of holding one’s breath over mortgage renewals and whether the cost of a cheddar sandwich might finally stabilise. Meanwhile, markets, ever eager to jump the gun, are toying with the idea of a rate cut in June or August, despite the Bank’s increasingly exasperated reminders that they don’t work on vibes alone.
“Let me be clear: we are not yet at the point where we can cut interest rates,” said Bailey, who has now said some version of that sentence more times than most people have boiled a kettle.
Only two members of the Monetary Policy Committee voted for a cut this time, suggesting that the internal tug-of-war over when to blink is still firmly in the arm-wrestling stage. The rest remain in the holding camp, which frankly could start charging rent at this point.
So for now, Britain remains quietly tense, with interest rates exactly where they have been for months while everyone waits for inflation to behave. Possibly by sternly scolding it or bribing it with lower energy prices.
And thus another month passes in the great British monetary standoff: fewer fireworks than expected, but the suspense is absolutely riveting if spreadsheets are your idea of drama.
The Bank of England is still playing it cool, which is just as well since no one can afford to sweat at 5.25 percent interest.