Bank of England Keeps Main Interest Rate on Hold at 5% in Wake of Big US Fed Rate Cut

The Bank of England has kept its main interest rate unchanged at 5% despite a big cut from the US Federal Reserve, its first since the onset of the coronavirus pandemic more than four years ago.

The decision Thursday was widely expected amid ongoing concerns about inflation within the bank's monetary policy committee, particularly the elevated levels in the crucial services sector, which accounts for around 80% of the British economy.

Figures on Wednesday showed that inflation overall in the UK held steady at an annual rate of 2.2% in August, still above the bank's goal.

The bank, which last month cut interest rates for the first time since the pandemic, is widely expected to reduce borrowing costs again at its next meeting in November, especially as it will have details of the government's budget on Oct 30.

On Wednesday, the Fed cut its main interest by half of a percentage point to roughly 4.8% from a two-decade high of 5.3%, where it had stood for 14 months. It also signalled that there will be more cuts to come in the next few months.