Bank of England Holds Steady on Interest Rates Amid Inflation Concerns

The Bank of England has maintained its main interest rate at 5%, despite a significant cut from the US Federal Reserve. This decision reflects ongoing concerns about inflation, especially in the services sector. Inflation in the UK stayed at 2.2% in August, above the bank's target.

The Bank of England has decided to keep its primary interest rate unchanged at 5%, even as the US Federal Reserve made a notable cut, marking its first since the COVID-19 pandemic began more than four years ago.

This decision, widely anticipated, comes amid continued worries about inflation within the bank's monetary policy committee, particularly the persistently high levels in the critical services sector, which constitutes approximately 80% of the British economy.

On Wednesday, data revealed that UK inflation remained steady at an annual rate of 2.2% in August, still higher than the bank's target.

Last month, the bank cut interest rates for the first time since the pandemic, and another reduction is expected at its next meeting in November, especially since it will have access to the government's budget details on October 30.

Meanwhile, on Wednesday, the US Federal Reserve reduced its main interest rate by half a percentage point to about 4.8%, down from a 20-year high of 5.3%, held for the past 14 months. The Fed also indicated that further cuts are likely in the coming months.

(With inputs from agencies.)