London: The Bank of England on Thursday kept its benchmark interest rate steady at 4%, aligning with market forecasts. This decision marks the end of a sequence of five rate cuts that began last August as the bank sought to lower borrowing costs.

According to Anadolu Agency, the Bank of England noted significant disinflation over the past two and a half years, following earlier external shocks, supported by a restrictive monetary policy stance. This progress has allowed for reductions in the Bank Rate over the past year. The Monetary Policy Committee remains committed to eliminating any existing or emerging inflationary pressures to sustainably bring inflation back to its 2% medium-term target.

The bank highlighted that the underlying disinflation trend continues, with more progress evident in easing wage pressures than price reductions. It reported that the twelve-month Consumer Price Index (CPI) inflation was 3.8% in August and is expected to rise slightly in September before moving towards the 2% target.

Concerns were raised about the risk of this temporary inflation increase leading to additional upward pressure on wage and price-setting processes. The bank observed that underlying UK GDP growth has been subdued, consistent with a gradual loosening in the labor market and a margin of slack in the economy, with domestic and geopolitical risks still present.

The central bank emphasized that a "gradual and careful" approach to easing monetary policy restraint is suitable. It noted that the restrictiveness of monetary policy has lessened with the reduction of the Bank Rate, and future adjustments will depend on the continuation of easing disinflationary pressures.

The decision to maintain the interest rate was made by the bank's Monetary Policy Committee with a majority vote of 7-2. The UK's annual consumer inflation stood at 3.8% in August, stable from the previous month, but at its highest level since January 2024.