Will BoE slow down pace of interest rate cuts? Yahoo Finance readers have their say
The central bank decided to hold the base rate at 4.5%, which is its lowest level in 20 months, after having reduced it last month in the third cut of this current cycle.
The BoE said in a statement announcing its latest decision that since the last monetary policy committee meeting "global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements, to which some governments have responded.
"Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules."
US president Donald Trump's volleying of trade tariffs has led to heightened volatility in stock markets, with investors concerned that the duties could stoke inflation, creating a further drag on the economy.
Meanwhile, government bonds sold-off globally recently, following an announcement from the incoming German government of plans to revamp debt rules to boost defence and infrastructure investment in Europe's largest economy. European leaders have been pledging to boost their defence spending, amid concerns of reduced support from the US.
Read more: UK pay growth stays above inflation ahead of Bank of England interest rate decision
In terms of the UK's economic situation, the BoE said on Thursday that "business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors."
The BoE said that based on the MPC's medium-term outlook for inflation, "a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate."
Inflation remains above the central bank's 2% target, having risen to 3% in January. The BoE has previously said that it expected inflation to reach 3.7% later this year.
In addition, data released by the Office for National Statistics (ONS) on Thursday, showed that while UK pay growth was steady at 5.9% in the three months to January on an annual basis, this was still ahead of inflation.
Meanwhile, economic growth has slowed, with the UK's gross domestic product (GDP) unexpectedly shrinking 0.1% in January.
Lindsay James, investment strategist at Quilter, said: "Market expectations are currently pricing in around two cuts for the remainder of the year, mirroring expectations for the US. The Bank of England will wish to avoid cutting rates too much too quickly for fear of causing further inflationary pressure, so for now this looks reasonable."
Earlier this week, we asked Yahoo Finance UK readers if they believed that the BoE would slow down its pace of interest rate cuts. We received 368 votes, with 60% believing that the central bank take a slower approach to reducing rates, while 29% disagreed and 11% were undecided on the matter.
Read more:
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