Interest rates held at 3.75% as Bank cuts UK growth outlook

Evening Standard

Interest rates have been held at 3.75% as the Bank of England said the UK economy will grow at a slower rate than previously thought, and unemployment will worsen.The Bank downgraded its growth forecasts for 2026, from 1.2% to 0.9%, and 2027, from 1.6% to 1.5%.The central bank said it was keeping rates unchanged to make sure that inflation stays around its target level of 2%.

Transcript

00:00My main message today is one of good news.

00:10Disinflation is on track and looks to be ahead of the schedule that we expected in November.

00:17CPI inflation has fallen from 3.8% in September to 3.4% in December,

00:22which is a little lower than we expected back in November.

00:25And we expect inflation to decline further to about 3% in January, February and March

00:32before reaching a level close to the 2% target from April, and we think then staying there.

00:40So that point of reaching near to the target is about a year earlier than we expected

00:46when we were last here back in November.

00:49As inflation has fallen, we've been able to ease our foot off the brake,

00:56making monetary policy less restrictive by cutting bank rates six times,

00:59including at the meeting we held in December.

01:02Recent developments provide more confidence that inflation is on track to return to the target soon.

01:10But we need to ensure that inflation falls all the way back to the 2% target and stays there.

01:15So today we've held bank rate at 3.75%.

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