The Bank of England (BoE) left its policy rate unchanged at 5%, in line with expectations.
In a statement made by the Bank of England (BoE), it was stated that at the Monetary Policy Committee (MPC) meeting, 8 of the members voted to keep the policy rate constant at 5 percent, while 1 voted to reduce it by 25 basis points.
In the statement, it was stated that the Monetary Policy Committee determined the monetary policy to achieve the 2 percent inflation target and at the same time to ensure sustainable growth.
The statement noted that the MPC took decisions with a medium-term and forward-looking approach, and said, “Monetary policy decisions were guided by the need to remove persistent inflationary pressures from the system in order to return inflation to the 2% target in a timely and permanent manner. The policy acts to ensure that inflation expectations are well anchored. As stated in the August Monetary Policy Report, the MPC’s deliberations were supported by the assessment of a range of situations where different possibilities and different risks may be involved.”
The statement emphasized that global shocks could create upward pressure on inflation, and that annual inflation, which was measured at 2.2 percent in August, could reach 2.5 percent by the end of the year, while service sector inflation remained high at 5.6 percent.
In the statement, which stated that the Monetary Policy Committee continues to closely monitor the risks to inflation, the following statements were used:
“In the absence of significant economic developments, a gradual approach to removing policy restrictions remains appropriate. Monetary policy will need to remain restrictive for a sufficiently long period until the risks to inflation returning sustainably to the 2% target over the medium term have receded further. The Monetary Policy Committee will continue to closely monitor risks to persistent inflation and will decide on the appropriate degree of restrictiveness of monetary policy at each meeting.”
Following the decision, BoE Governor Andrew Bailey said that inflationary pressures have continued to ease since they lowered the policy rate in August, and noted the following:
“The economy is progressing broadly as we expected. If this continues, we may gradually reduce the policy rate over time. However, it is vital that inflation remains low, so we must be careful not to cut the policy rate too quickly or too much.”
