Bank of England maintains high interest rates due to economic weakness, projects stagnation, and concerns about inflation.
The Bank of England, in response to signs of economic weakness, decided to maintain interest rates at their highest levels in 15 years, keeping them steady at 5.25 percent. The bank emphasized that these elevated interest rates would need to be sustained for an extended period, reflecting their concerns about the economic outlook.
In the bank’s projections accompanying this rate decision, they anticipate a prolonged period of economic stagnation. Specifically, they foresee the economy remaining nearly stagnant in the third quarter of the current year, with a marginal growth of 0.1 percent in the final three months of the year. This tepid growth is expected to persist into 2025.
One persistent concern that continues to loom is high inflation. Projections for the inflation rate in 2024 and 2025 have edged slightly higher compared to a few months ago, indicating that this issue is proving to be resilient and challenging to resolve.
