Interest rates held at 4% as inflation continues to bite

The Bank of England has held interest rates at 4 per cent as it said the UK was “not out of the woods” on inflation, with taxes contributing to rising food costs.

- ANNA WISE

Its Monetary Policy Committee (MPC) voted to keep rates unchanged, following a 0.25 percentage point cut in August. Governor Andrew Bailey said: “Although we expect inflation to return to our 2 per cent target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully.”

The MPC said it was being cautious about cutting borrowing costs until it had more evidence that pressures on UK inflation were easing.

Consumer prices index (CPI) inflation stayed at 3.8 per cent in August, official data showed on Wednesday, remaining at the highest level since the beginning of 2024 and above the Bank’s 2 per cent target rate.