LONDON (AP) — The Bank of England kept its main interest rate unchanged at 5% Thursday despite a big cut from the U.S. Federal Reserve, its first since the onset of the coronavirus pandemic more than four years ago.
The decision 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% of the British economy. Figures on Wednesday showed that inflation overall in the U.K. held steady at an annual rate of 2.2% in August, still above the bank’s goal.
Minutes to the meeting showed that eight of the nine members of the panel voted to keep rates unchanged, while one backed a quarter-point reduction.
“The economy has been evolving broadly as we expected. If that continues, we should be able to reduce rates gradually over time,” said Bank Gov. Andrew Bailey. "But it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much.”
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% from a two-decade high of 5.3%, where it had stood for 14 months. It also signaled that there will be more cuts to come in the next few months.
Central banks around the world dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up and then because of Russia’s full-scale invasion of Ukraine which pushed up energy costs. As inflation rates have fallen from multi-decade highs recently, they have started cutting interest rates.
On Wednesday, the Fed became the latest major central bank to reduce borrowing costs, cutting its main interest by half of a percentage point to roughly 4.8% from a two-decade high of 5.3%, where it had stood for 14 months. It also signaled that there will be more cuts to come in the next few months.
Though Thursday's decision could be seen as bad news for borrowers, they should get some relief over the coming months, with most economists predicting that the bank will reduce its main rate to around 3.5% by the end of 2025, with a consequent reduction in the cost of personal loans and mortgage rates.
The bank 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.
The new Labour government has said that it needs to plug a 22 billion pound ($29 billion) hole in the public finances and has indicated that it may have to raise taxes and lower spending, which would likely weigh on the near-term outlook for the British economy and put downward pressure on inflation.
Luke Bartholomew, deputy chief economist at abrdn, formerly Aberdeen Asset Management, said the Bank of England "will need to incorporate any fiscal changes in its next forecasts, which could provide the foundation for more rapid cuts in due course.”
Bank of England widely expected to hold interest rates despite big US Fed cut
FILE - The Bank of England is pictured in London, on Aug. 1, 2024. (AP Photo/Alberto Pezzali, File)
Bank of England widely expected to hold interest rates despite big US Fed cut
CHENNAI, India (AP) — Ravichandran Ashwin scored his sixth test hundred as he and Ravindra Jadeja dug India's cricketers out of trouble against Bangladesh on day one of the first test on Thursday.
Ashwin hit 102 not out in 112 balls – his second test century on his home ground in Chennai – as the home team reached 339-6 in 80 overs.
He put on an unbeaten 195-run stand with Jadeja for the seventh wicket – the highest for India against Bangladesh – to rescue the team from a precarious 144-6.
Jadeja finished the day unbeaten on 86 off 117 balls.
Paceman Hasan Mahmud was the chief destroyer as Bangladesh reduced India to 88-3 in the morning session, with skipper Rohit Sharma, Shubman Gill and Virat Kohli all falling for single figures.
Then post lunch, Rishabh Pant was caught at slip off Mahmud for 39 after he and opener Yashasvi Jaiswal had shared a stand of 62.
Lokesh Rahul returned to test cricket for the first time since January and scored 16 runs in a fifth-wicket partnership of 48 with Jaiswal.
Jaiswal, though, was caught off paceman Nahid Rana for 56, while Rahul was removed by spinner Mehidy Hasan Miraz to a catch at short leg for 16.
Ashwin and Jadeja then attacked the Bangladesh bowling. Ashwin was the main aggressor, hitting 10 fours and two sixes as he sped to 50 off 58 balls.
His second 50 came at a run-a-ball, reaching 100 off 108 deliveries. Ashwin also scored a century on this ground against England in 2021.
Jadeja was solid at the other end, going to his 50 off 73 balls with his trademark swordplay celebration. He hit 10 fours and two sixes in all.
The second test will be played in Kanpur and begins on Sept. 27, with three Twenty20 matches to follow.
AP cricket: https://apnews.com/hub/cricket
India's captain Rohit Sharma, left, and Bangladesh's captain Najmul Hossain Shanto greet each other before the start of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
Bangladesh's Hasan Mahmud, right, celebrates the wicket of India's Shubman Gill on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Rishabh Pant plays a shot on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Rishabh Pant plays a shot on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Yashasvi Jaiswal plays a shot on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Yashasvi Jaiswal plays a shot on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's captain Rohit Sharma, left, and Bangladesh's captain Najmul Hossain Shanto greet each other and pose with trophy before the start of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Yashasvi Jaiswal, left,Rishabh Pant encourage each other as they bats on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Virat Kohli walks to the pavilion after losing his wicket to Bangladesh's Hasan Mahmud on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
India's Yashasvi Jaiswal plays a shot on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
Bangladesh's Hasan Mahmud bowls a delivery on the first day of the first cricket test match between India and Bangladesh, in Chennai, India, Thursday, Sept.19, 2024. (AP Photo/Mahesh Kumar A.)
