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The Bank of England (BoE) has voted to hold interest rates at 4.75%, following a recent hike in both inflation and wage growth.
At its meeting this week, the bank’s monetary policy committee voted by a majority of 6–3 to maintain the current rate. Three members voted to reduce interest rates by 0.25 percentage points to 4.5%.
It comes as inflation has risen for the second month in a row, rising to 2.6% in November, up from 2.3% the previous month, marking the highest level of inflation in eight months.
The BoE today said this rise was “slightly higher than previous expectations”, and means the inflation figure is still above the Bank of England’s target of 2%.
According to the Office for National Statistics (ONS), the main drivers behind the rise were fuel and clothing, where prices rose this year but fell a year ago. The BoE added that inflation is expected to continue to rise slightly in the near term.
In addition, the ONS has found that wages are now growing at 5.2%, up from 4.9% three months ago.
Last month, the BoE voted to cut interest rates for the second time in a year, with rates cut to 4.75%, down from a previous rate of 5%.
It had previously decided to hold interest rates at 5% in September, having lowered them for the first time in four years in August.
According to the BoE’s latest findings however, most indicators of UK near-term activity have declined, and the bank expects GDP growth to have been weaker at the end of the year than projected in its November monetary policy report.
The bank will next discuss an interest rates cut at its next meeting in February.
