The Bank of England kept its interest rates at a 16-year high at 5.25% on Thursday as inflation has yet to reach the central bank’s target of 2%.
The market is now watching closely for any signs that could indicate a signal for upcoming rate cuts, following the disappointment by the US Federal Reserve the day before that it was quite sure it will not cut interest rates as soon as March.
According to the data published by the central bank late last year, a sharp fall in energy prices was visible as inflation in December 2023 was at 4%. Economists are now expecting prices to be on course to the BoE’s target in late 2025.
The risk of a slow decline at the end of this inflation cycle prompted the BoE to issue a warning to the market that it may need to keep interest rates at a higher level for an extended period.
