BoE Holds Rate as Fed Cuts; Dissenters Push for Bold Action in Slow-Lane Policy Environment

London — The Bank of England kept the bank rate at 4% at its latest policy meeting, even as the U.S. Federal Reserve cut rates overnight. The outcome underscored a global policy backdrop in which UK lawmakers have remained cautious, while some officials argue that lowering borrowing costs could support growth and jobs in a subdued economy.

Two Monetary Policy Committee members, Swati Dhingra and Alan Taylor, dissented from the decision to hold and argued for a quarter-point reduction. Their stance reflected concerns that persistent high borrowing costs are weighing on consumer demand and business investment amid budgetary and tax uncertainties. The dissent highlighted fears that a slower economy, not just inflation, could threaten employment and long-run growth if policy remains too tight for too long.

Budgetary and tax uncertainties compound the headwinds facing households and firms. The decision comes as global conditions remain clouded by tariff tensions, including an average 20% tariff environment cited in some analyses. Trade data show UK physical exports, including steel, aluminium and automobiles, are under pressure, complicating the Bank’s assessment of the domestic demand cycle. In that context, mortgage-rate levels, which have stayed elevated for an extended period, continue to strain the housing market. Labour’s withdrawal of stamp-duty relief for lower-value homes has been described by some observers as a factor weighing on housing transactions and prices.

Inflation remains high by historical standards, at around 3.8% in the United Kingdom, with economists forecasting it may hover near 4% in the coming month before disinflationary pressures reassert themselves. In the near term, policy-makers are juggling the risk that price pressures could reaccelerate if administered costs rise or if the energy and services components behave unpredictably. However, the trend toward easing is viewed by many as intact, barring any policy missteps or unexpected fiscal shocks in the autumn budget.

The Bank’s approach to its balance sheet remains a focal point. Officials have signaled a desire to reduce gilt holdings gradually to