Bank of England Keeps Interest Rate Steady at 5%

The Bank of England did not do as the US did this week. On Thursday it decided to maintain its main interest rate at 5% after having moved forward with a quarter-point cut last month. The Bank of England's decision was an expected one that was driven by persistent inflation concerns, particularly within the services sector, which constitutes about 80% of the UK economy. There are expectations for further rate cuts in November. The anticipation is tied to the release of the UK government's budget on October 30.

Recent data revealed that UK inflation held steady at an annual rate of 2.2% in August, above the bank's 2% target. Globally, central banks have been adjusting interest rates in response to inflation trends post-pandemic and the conflict in Ukraine. The Fed anticipates further rate reductions in the coming months following its half-a-percentage-point cut on Wednesday. Additionally, the new Labour government in the UK faces a fiscal challenge, needing to address a £22 billion gap in public finances, likely influencing future economic policies to curb inflation. (This story was generated by Newser's AI chatbot. Source: the AP)