The Bank of England maintains interest rates at 5.25%.

• The Monetary Policy Committee decided to maintain rates at their current level by a vote of 8 to 1, with one member advocating for a 25 basis point reduction to 5%.
• For the first time in this cycle, no members voted for further hikes, despite two members supporting a quarter-point increase at the previous meeting.

The Bank of England kept interest rates at 5.25% on Thursday, but signaled potential cuts in the future as inflation is declining at a faster rate than anticipated.

The Monetary Policy Committee voted 8-1 to maintain rates unchanged, with one member advocating for a 25 basis point reduction to 5%. Notably, this marks the first time in the current cycle that no members have voted for an increase in rates.

In February, headline inflation decreased more than anticipated to a 3.4% annual rate, marking its lowest point since September 2021, according to data released Wednesday.

The household energy price cap is lowered in April, and the central bank anticipates that the consumer price index will reach its 2% target in the second quarter.

The MPC stated in its report that the headline CPI inflation has decreased significantly due to both base effects and external factors such as energy and goods prices.

"Despite the restrictive stance of monetary policy, which is weighing on activity in the real economy and leading to a looser labor market, inflationary pressures are still being borne down upon. However, key indicators of inflation persistence remain elevated."

The MPC stated that monetary policy must remain restrictive for an extended period to achieve a sustainable 2% inflation target in the medium term.

The statement also mentioned that it will continue to monitor indications of persistent inflationary pressures and resilience in the economy as a whole, including labor market conditions, wage growth, and services inflation.

The U.K. economy has been in a technical recession since the final quarter of 2023 and has experienced two years of stagnation, putting the central bank in a delicate position as it tries to balance controlling inflation at 2% without causing a prolonged economic downturn.

Central banks worldwide are considering when to loosen monetary policy following two years of tightening, in an effort to curb global inflation.

Despite recent hotter-than-expected readings, the U.S. Federal Reserve on Wednesday held steady on rates and maintained its forecast for three rate cuts this year, with Chair Jerome Powell seeking confirmation that inflation is returning to the 2% target.