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The Bank of England has held interest rates at 5 per cent after inflation remained steady in August, but indicated it may lower borrowing costs again as soon as November.
The Monetary Policy Committee’s eight-to-one decision on Thursday came after it cut borrowing costs by a quarter point at its meeting last month.
In a signal that another rate reduction is likely as soon as its next meeting in November, the BoE said that it would take a “gradual” approach to loosening policy, assuming there are no material changes in the economy.
Sterling extended gains and was up 0.7 per cent on the day at $1.33 after the BoE’s announcement.
Andrew Bailey, the bank governor, said inflationary pressures were easing and that the economy was evolving “broadly as we expected”.
“If that continues, we should be able to reduce rates gradually over time,” he said. “But it’s vital that inflation stays low, so we need to be careful not to cut too fast or by too much.”
The BoE decision came a day after the US Federal Reserve cut rates by half a point and signalled that more reductions would follow.
UK inflation held steady at 2.2 per cent in August, but economists noted persistent price pressures in the services sector.
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