LONDON (AP) — The Bank of England kept its main U.K. interest rate unchanged at 4.50% on Thursday even though the economy is barely growing and the nation faces more uncertainty in light of the tariff policies being enacted by the Trump administration in the U.S.
The decision by the nine-member Monetary Policy Committee was widely expected, and comes a day after the U.S. Federal Reserve also kept interest rates unchanged.
Minutes from the meeting showed that eight members voted to keep policy unchanged, with one backing a quarter-point reduction.
The rate-setting panel has reduced the Bank of England’s main rate from a 16-year high of 5.25% by a quarter of a percentage on three occasions since last August, most recently in February, after inflation fell from the multi-decade highs of over 10% reached in the wake of the sharp spike in energy prices following Russia's full-blown invasion of Ukraine in early 2022 .
However, inflation, at 3%, remains above the bank’s 2% target and is set to push higher in coming months, even without accounting for any tariffs imposed by the Trump administration. Many economists think it could rise as high as 4% in the coming months as businesses are raise prices as a result of a big increase in the minimum wage and higher payroll taxes.
“There’s a lot of economic uncertainty at the moment," said Bank Gov. Andrew Bailey. “We still think that interest rates are on a gradually declining path, but we’ve held them at 4.5% today.”
If policymakers continue to pursue their recent gradual approach, then another cut is likely in May, when they will be armed with the bank’s latest economic projections and Bank Gov. Andrew Bailey next holds a press conference.
Bailey said rate-setters will be “looking very closely at how the global and domestic economies are evolving” and that whatever happens, "it’s our job to make sure that inflation stays low and stable.”
The U.S. Federal Reserve, which kept borrowing rates unchanged Wednesday, also expressed uncertainty about the near-term economic outlook, particularly in light of U.S. President Donald Trump’s tariff policies, which economists worry would lower global growth and lead to an uptick in prices.
The British economy, the sixth-largest, eked out modest growth of 0.1% in the fourth quarter, a hugely disappointing outcome for the new Labour government, which has made boosting growth its number one economic policy. Since the global financial crisis in 2008-2009, the British economy’s growth performance has been notably below its long-run average.
Critics say Treasury chief Rachel Reeves is partly responsible for the gloomy economic news since Labour returned to power in July after 14 years, because she was overly downbeat when taking on her role and has since increased taxes, particularly on businesses.
Reeves, who on March 26 will deliver a keenly-watched statement on the state of the public finances to lawmakers, will be hoping that the Bank of England does cut borrowing rates further over coming months as it will likely help shore up growth.
Economists said the latest update from the bank did little to clear up the outlook, though most said a further quarter-point reduction in May remained on the cards.
“But beyond that, much will depend on trade policy out of the U.S. and the fiscal announcements coming from the Chancellor,” said Luke Bartholomew, deputy chief economist at asset management firm Aberdeen.
FILE - General view of the Bank of England, in London, Monday, May 2, 2022. (AP Photo/Alberto Pezzali, File)
A woman walks past the Bank of England, at the financial district, in London, Thursday, March 13, 2025. (AP Photo/Kin Cheung)
A woman walks past the Bank of England, at the financial district, in London, Thursday, March 13, 2025. (AP Photo/Kin Cheung)
TEL AVIV (AP) — Unlike many families who blame Israel's government for not getting their loved ones released from captivity in Gaza, Adi Alexander is hesitant to point fingers. Pragmatic and measured, the father of the last living American being held hostage by Hamas just wants his son to come home.
“I don't want to get into who came first, the egg or the chicken,” Alexander told The Associated Press on Friday from his New Jersey home. Still, with the once-promising ceasefire giving way to renewed fighting between Israel and Hamas, he wonders whether Israel can secure his son's freedom and is more hopeful about the U.S.'s chances to do it.
Edan Alexander, a 21-year-old Israeli-American soldier who grew up in the U.S., is one of 59 hostages still in Gaza, more than half of whom are believed to be dead. Last week, Hamas said it would release Edan and the bodies of four other hostages if Israel recommitted to the stalled ceasefire agreement.
Days later, though, Israel launched rockets across Gaza, breaking the two-month-old deal and killing hundreds of Palestinians. The hostilities show no signs of abating, with Israel vowing Friday to advance deeper into Gaza until Hamas releases the remaining hostages.
The return to fighting has inflamed the debate in Israel over the fate of those held captive. Israeli Prime Minister Benjamin Netanyahu has come under mounting domestic pressure, with mass protests over his handling of the hostage crisis. But he also faces demands from his hard-line allies not to accept any deal that falls short of Hamas’ destruction.
Adi Alexander said he thinks Netanyahu wants to bring everybody home, but on his own terms. He questions Netanyahu's plans whereas he believes U.S. President Donald Trump's message is clear: He's focused on bringing the hostages home. Alexander said he's counting on the U.S. to bridge the large gap between Israel and Hamas. His message to Trump about his administration's efforts to free his son and the others: “Just keep this job going."
Many families of the hostages say Trump has done more for them than Netanyahu, crediting the president with the ceasefire. In December, before taking office, Trump demanded the hostages' immediate release, saying if they weren’t freed before he was sworn in for his second term there would be “hell to pay.”
Phase one of the deal began weeks later, and saw the release of 25 Israeli hostages and the bodies of eight others in exchange for nearly 2,000 Palestinian prisoners. The ceasefire was supposed to remain in place as long as talks on the second phase continued, but Netanyahu balked at entering substantive negotiations.
Instead, he tried to force Hamas to accept a new ceasefire plan put forth by U.S. Mideast envoy Steve Witkoff. That plan would have required Hamas to release half its remaining hostages — the militant group’s main bargaining chip — in exchange for a ceasefire extension and a promise to negotiate a lasting truce.
Hamas has said it will only release the remaining hostages in exchange for a lasting ceasefire and a full Israeli withdrawal from Gaza, as called for in the original ceasefire agreement mediated by the United States, Egypt and Qatar.
As a soldier, Edan would have been released during the deal’s second phase. But Hamas announced this month that it would release Edan after the White House said it had engaged in “ongoing talks and discussions” with the group — separate from the main negotiations. It is the first known direct engagement between Hamas and the U.S. since the State Department designated it a foreign terrorist organization in 1997.
Adi Alexander said Adam Boehler, who's helping spearhead the Trump administration's efforts to free the hostages, led those separate talks because phase two was stalled. But he said he didn’t believe Hamas’ claim that it would release his son because it came out of left field and wasn't being considered as part of the discussions between the group and Boehler.
The anxious father said he speaks with Witkoff and Boehler almost daily and understands the negotiations are ongoing despite the resumption of fighting.
A native of Tenafly, a New Jersey suburb of New York City, Edan moved to Israel in 2022 after high school and enlisted in the military. He was abducted from his base during the Oct. 7, 2023, attack that ignited the war, when Hamas killed about 1,200 people in Israel and took 251 others hostage.
Since Edan's abduction, there's been little news about him.
Hamas released a video of him over Thanksgiving weekend in November. His family said it was difficult to watch as he cried and pleaded for help, but it was a relief to see he was alive.
Freed hostages have given the family more news, according to his father. Some said Edan had lost a lot of weight. Others said he'd been an advocate for fellow hostages, standing up for kidnapped Thai workers and telling their captors that the workers weren’t Israeli and should be freed.
Although he knows the resumption of fighting means it will take more time to get his son back, Adi Alexander said he thinks both sides had became too comfortable with the ceasefire and that this was one reason phase two never began. He wants the war to end, and hopes the fighting will be limited and targeted and push everyone back to the table.
“Somebody, I think had to shake this tree to create chaos, and chaos creates opportunities," he said. “The only objective is to get back to the bargaining table to get those people out.”
FILE - From left, Yael and Adi Alexander, parents of Eden Alexander, who was abducted and brought to Gaza on Oct. 7, 2023, listen to Liz Hirsh Naftali, great aunt of Abigail More Edan, as families and victims of the Hamas attacks meet with the House Foreign Affairs Committee, at the Capitol in Washington, Nov. 29. (AP Photo/J. Scott Applewhite, File)
