THE Bank of England has held interest rates at 4.75% as it cautioned over “heightened uncertainty in the economy” following the UK Budget and US presidential election.
The Monetary Policy Committee (MPC) said it was keeping rates unchanged on Thursday after cutting the level in August and again in November.
Six members of the MPC preferred to keep the base rate at 4.75%, while three voted for a 0.25 percentage point reduction.
Governor Andrew Bailey said the central bank needs to make sure inflation returns to its 2% target level on a “sustained basis”.
“We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year,” he said.
Chancellor Rachel Reeves said: “I know families are still struggling with high costs. We want to put more money in the pockets of working people, but that is only possible if inflation is stable and I fully back the Bank of England to achieve that.
“Improving living standards across the country is our number one focus, and is why I chose to protect working people’s pay slips from tax rises, froze fuel duty and increased the National Living Wage for three million people."
Richard Fuller, the Tories' shadow chief secretary to the Treasury, said: “The Bank of England has already warned Labour's Budget will increase inflation and could cause 'uncertainty' in the economy, making it more difficult for the Bank to cut rates.
“On Labour’s watch inflation is ticking back up – meaning higher prices, higher mortgage rates and less money in people’s pockets."
