Bank of England Holds Interest Rates Steady Despite Rising Inflation

Investing.com -- The Bank of England (BOE) decided to keep interest rates unchanged on Thursday, concluding its last meeting of the year after inflation in the United Kingdom rose to the highest level in eight months. This decision aligned with economists' expectations that interest rates would remain steady at the December meeting due to concerns over persistent service inflation and wage increases.
Earlier this year, the BOE had cut the main interest rate from 5.25% to 4.75% in two quarter-point steps. However, this week, money markets diminished their expectations for the pace of further rate cuts next year. This shift in outlook stemmed from the release of inflation and wage growth data for November and the summer period. Market participants are currently anticipating approximately 50 basis points in future cuts, representing a decrease from the roughly 70 basis points expected on Monday.
The BOE's recent decision followed the U.S. Federal Reserve's (Fed) move on Wednesday to lower interest rates by a quarter point. While the rate cut was expected, the central bank's statement that it is likely to implement only two more cuts in 2025 surprised traders.