The Bank of England has left interest rates unchanged after 14 successive hikes, leaving the base rate at 5.25%.
The BoE’s Monetary Policy Committee made the decision, which was seen as a 50/50 call by City pundits, in the wake of weaker-than-expected inflation figures on Wednesday.
At its meeting ending on 20 September 2023, the MPC voted by a majority of 5–4 to maintain Bank Rate at 5.25%.
Four members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%.
The MPC didn't rule out further rate increases, stating: "Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures."
It also hinted rates would stay higher, for longer.
"Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the Committee’s remit," it said.
But it noted "there are increasing signs of some impact of tighter monetary policy on the labour market and on momentum in the real economy more generally".
"Given the significant increase in Bank Rate since the start of this tightening cycle, the current monetary policy stance is restrictive," it added.
The Bank expects CPI inflation to fall significantly further in the near term, reflecting lower annual energy inflation, despite the renewed upward pressure from oil prices, and further declines in food and core goods price inflation.
Services price inflation, however, is projected to remain elevated in the near term, with some potential month-to-month volatility.
But it forecasts modest growth for the rest of 2023.
"While some of this news could prove erratic, Bank staff now expect GDP to rise only slightly in 2023 Q3. Underlying growth in the second half of 2023 is also likely to be weaker than expected."