Bank of England keeps main interest rate at 16-year high of 5.25% despite inflation fall
Associated PressLONDON — The Bank of England on Thursday kept its main interest rate at a 16-year high of 5.25% even though inflation has fallen to its target of 2%, with several policymakers warning that a premature cut could stoke another bout of price rises. It said the decision was, as always, based on achieving the 2% inflation target “sustainably in the medium term.” Economists believe that a cut is imminent, either at the bank’s next policymaking meeting in August or the following one in September. “We continue to think that the MPC will start dialling down restrictive policy from summer and deliver two rate cuts this year,” said Sanjay Raja, chief U.K. economist at Deutsche Bank. “Given that the U.K. has moved onto a milder inflationary trajectory, rate setters remain too circumspect over the likelihood of loosening policy, risking unnecessarily impeding the U.K.’s growth prospects,” said Suren Thiru, economics director at The Institute of Chartered Accountants in England and Wales.