Bank of England holds interest rate steady at 4% citing subdued growth

[Bank of England - British central bank]
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The Bank of England maintained interest rate at 4% on Thursday, meeting market estimates as the market navigates slow growth alongside still-elevated inflation.

The vote tally of the Monetary Policy Committee members was 7–2 to keep the rate unchanged, with two members favoring a 25 bps cut to 3.75%.

The committee voted by a majority of 7–2 to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves by £70 billion over the next 12 months, to a total of £488 billion.

Policymakers highlighted progress in disinflation after past shocks, supported by restrictive policy, though inflation remains above target.

The British pound consolidated gains above $1.36, trading near its strongest level since early July, after the Bank of England left interest rates.

"A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate," the bank said [https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/september-2025].

The region's August CPI came in at 3.8% [https://seekingalpha.com/news/4495512-uks-inflation-steady-at-38-in-august], matching July’s 18-month high, while economic growth remains weak, with just 0.2% expansion in the three months to July.

"Given where the data is in relation to the August forecasts, I expect a hawkish pause from the Bank of England. With the cut last month, the Bank Rate is currently below what the August forecast has it set at for Q3 2025, while inflationary pressures are slightly hotter than expected and joblessness is undershooting the forecast. The voting trend in the August meeting is very important here, as it would only take one member to decide not to cut in the November meeting to break the current easing cycle," SA contributor MTS Insights commented. [https://seekingalpha.com/article/4823763-uk-august-cpi-stable-inflation-confirms-a-boe-pause-tomorrow]

BOE Governor Andrew Bailey had previously indicated that the rate path remains "open."

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Currency: (GBP:USD [https://seekingalpha.com/symbol/GBP:USD])

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