Bank holds rates with stark warning on unemployment

BANK of England policymakers pegged interest rates at 3.75% yesterday, while revising unemployment forecasts up and economic growth down.

- By Mauricio Alencar

The Monetary Policy Committee voted 5-4 against a cut — the last one was December's reduction from 4%.

The Bank also said the jobless rate could peak at 5.3% this year, compared to a previous prediction of 5%.

And in a damning revision for Chancellor Rachel Reeves, it now expects GDP growth to be 0.9%, against its last forecast of 1.2%.

Governor Andrew Bailey voted for interest rates to be held but said cuts will come as inflation — currently 3.4% — is set to near the Bank's 2% target in April. Previous forecasts said this would not happen until next year.