Bank of England defies Fed’s rate-hike lead, leaving rates unchanged

Live updates

1. 2h ago

   Bank of England Holds Interest Rates Despite Rising Inflation

   The Bank of England maintained interest rates at 3.75%, diverging from the US Federal Reserve which raised rates to 4%. While the bank kept rates steady, it warned of persistent inflation pressures and indicated a shift toward future hikes. This decision comes as UK inflation is projected to exceed 4%. Alongside the rate hold, the bank announced an overhaul of its gilt sales plan and a reshuffle of its balance sheet. Market reactions included a price increase for gold following the announcement.

   Why it matters

   Central banks typically coordinate or follow similar trajectories to stabilize global currencies and combat inflation. The divergence between the BoE and the Fed suggests different economic pressures or policy priorities between the UK and US. The shift in tone regarding future hikes indicates the bank is preparing the market for tighter monetary policy.

   What is confirmed

   • The Bank of England held interest rates steady.
   • The US Federal Reserve increased interest rates to 4%.
   • The Bank of England maintained rates at 3.75%.
   • The Bank of England is overhauling its gilt sales plan.
   • The Bank of England warned of inflation pressures.

   Still unconfirmed

   • Inflation is set to top 4%.
   • An energy shock is prompting discussions about a rate hike.
   • The Bank of England is ready to hike rates soon.
   • Gold prices rose as a result of the rate hold.

   What to watch next

   • Official inflation data confirming if rates top 4%
   • Future Bank of England policy meetings regarding rate hikes
   • Implementation details of the overhauled gilt sales plan
   Sources used for this update (14)

   1. cnbc.com — Bank of England set to defy Fed’s rate-hike lead, despite rising inflation
   2. BBC — Interest rates hold expected but Bank of England facing tough choices
   3. reuters.com — Bank of England to hold rates but energy shock stirs talk of a hike
   4. The New York Times — Bank of England Holds Rates Steady but Warns of Inflation Pressures
   5. AP News — Bank of England holds rates but appears ready to hike soon
   6. Bloomberg.com — The Bank of England’s Big Balance Sheet Shuffle
   7. KITCO — Gold catches a bid as BoE leaves interest rates unchanged
   8. WSJ — Why the Bank of England Didn’t Follow the Fed in Raising Interest Rates
   9. Bloomberg.com — Bank of England Holds Rates, Overhauls Gilt Sales Plan
   10. The Economist — World in Brief: Bank of England holds rates; Russia pounds Ukraine
   11. Reuters — Bank of England shifts tone toward rate hikes as inflation set to top 4%
   12. Financial Times — Bank of England says rates likely to rise as it overhauls gilt sales
   confidence 90%