The Bank of England kept its key interest rate at four percent Thursday, as elevated UK inflation offsets the country’s stagnant economic growth.

The decision widely expected by markets followed a regular policy meeting and came one day after the US Federal Reserve cut its benchmark borrowing costs for the first time in 2025.

“Although we expect inflation to return to our two-percent target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully,” Bank of England governor Andrew Bailey said in a statement.

Official data Wednesday showed UK annual inflation at 3.8 percent in August. The BoE on Thursday confirmed that it is set to peak at four percent this month.

Policymakers have to balance rising inflation against Britain’s sluggish economy and

See Full Page