Bank of England holds interest rates at 4.5% amid fears over stubborn inflation
The Bank of England has kept interest rates on hold at 4.5% amid rising global uncertainty and concerns over stubbornly high inflation.
The central bank's rate-setting monetary policy committee (MPC) voted to pause its cycle of rate cuts after three previous reductions in the past year.
Financial markets had widely expected the MPC to leave rates unchanged on Thursday, after Threadneedle Street in February lowered its key base rate from 4.75% and halved its UK growth forecast.
It comes less than a week before the chancellor, Rachel Reeves, will deliver her spring statement to the Commons on Wednesday, at a time when the UK economy is struggling for growth momentum after output unexpectedly fell in January and came close to stalling in the second half of last year. It also comes amid heightened concerns over Donald Trump's trade wars hitting the world economy.
UK inflation remains above the Bank's 2% target and is expected to climb further within months as household energy costs increase and businesses react to measures in Reeves's October budget that come into force in April.
Industry groups have said the chancellor's planned £25bn increase in employers' national insurance contributions, and a 6.7% rise in the minimum wage from April, could feed through to higher prices.
Inflation has fallen from a peak of more than 11% in the second half of 2022 after Russia's invasion of Ukraine triggered a spike in energy costs. But the headline rate has begun rising again in recent months, increasing from 2.5% in December to 3% in January.
Threadneedle Street has signalled that borrowing costs are likely to be reduced in the coming months. However, economists have said rates may need to be held higher for longer to squeeze persistent inflationary pressures despite a slowdown in economic activity in the second half of last year.
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