The Bank of England paused its monetary easing on Thursday amid intensifying uncertainty over global trade policy and weak economic growth in the U.K.
The nine-member Monetary Policy Committee, headed by BoE Governor Andrew Bailey, decided to maintain the Bank Rate at 4.5 percent, which was the lowest level since June 2023.
Only Swati Dhingra, an external member of the committee, preferred a quarter point reduction, while fellow policymaker Catherine Mann dropped her call for a rate cut.
The U.K. central bank had reduced the rate by 25 basis points in February after two such reductions last year.
"There was no presumption that monetary policy was on a pre-set path over the next few meetings," the bank said.
"Monetary policy would need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2 percent target in the medium term had dissipated further," the BoE said.
"The Committee would decide the appropriate degree of monetary policy restrictiveness at each meeting," the bank added.
Bank staff forecast the economy to grow around 0.25 percent in the first quarter of 2025. Growth estimates were slightly stronger than expected in February.
Inflation is projected to rise further in the near-term to about 3.75 percent in the third quarter but to fall back thereafter.
Data released earlier in the day showed that the U.K. unemployment rate held steady at 4.4 percent in the three months to January and the wage growth remained strong.
ING economist James Smith said barring a surprise collapse in the jobs market or an equally surprising energy-driven pick-up in services inflation, the Bank is poised to continue making quarterly rate cuts throughout 2025.
The rate-setting committee noted that global trade policy uncertainty intensified since the last MPC meeting and other geopolitical uncertainties and financial market volatility rose globally.
The BoE rate decision was in tandem with the wait-and-watch stance of the U.S. Federal Reserve on Wednesday and also came ahead of UK Chancellor's Spring Statement due on March 26.
In the statement, Chancellor Rachel Reeves is set to provide an update on the economic health and the progress made since the autumn budget.
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March 21, 2025 09:58 ET Central banks, led by the U.S. Fed, were in focus this week as they announced their latest policy moves. The Fed revealed the latest interest rate decision and outlook mid-week. Economic data released this week in the U.S. included retail sales figures for February. In Europe, central banks of the U.K. and Switzerland, among several others, announced their rate decisions. The Bank of Japan was in the news in Asia as it revealed its latest policy decision.