Bank of England follows US Fed Reserve in pausing interest rate hike
London, Nov 2 : The Bank of England (BoE) on Thursday left its key interest rate untouched at 5.25 per cent, a day after the US Federal Reserve took the step to pause further hikes as global inflation eases.
However, the interest rate in the UK still remains the highest in more than 15 years, with the country reeling from the highest rate of inflation among the G7 advanced nations.
BoE Governor Andrew Bailey said it was "much too early" to think about cutting rates.
"We've held rates unchanged this month, but we'll be watching closely to see if further rate increases are needed," Bailey said in a statement.
The BoE expects GDP to grow by 0.5 per cent this year, unchanged from its last forecast, but downgraded its outlook for 2024 from 0.5 per cent to 0 per cent.
Holding the rate at 5.25 per cent will be positive news for homeowners as when the rates go up, the cost of borrowing increases.
The pause in the US Fed Reserve interest rate hike and now the BoE following in the same footsteps is expected to have a positive impact on the Indian stock markets and the rupee as foreign funds are less likely to exit.
The US Fed kept the benchmark lending rate between 5.25 per cent and 5.50 per cent.
The European Central Bank last week left Eurozone interest rates unchanged after raising them in each of its previous 10 meetings.
Inflation in the UK peaked at 11.1 per cent in October 2022, stoked by rising oil prices after the Ukraine war but has come down to 6.7 per cent since then.