The Bank of England (BoE) made its interest rate announcement yesterday, one day after the Bank of Canada and US Federal Reserve Board. Unlike the rate cuts from those two central banks, the BoE elected to hold steady, which followed a 25 basis point rate cut at its previous meeting. US President Donald Trump visited UK Prime Minister Keir Starmer to discuss several key matters affecting both countries, such as trade, technology and geopolitical tensions.

• The BoE held its policy interest rate steady at 4.00% at its September meeting. BoE officials voted 7-2 in favour of a rate hold, which was widely expected by economists, based on a Bloomberg survey. The UK central bank had lowered its policy interest rate at its August meeting.
• The BoE believed the rate hold was warranted given the potential for inflation to move higher over the medium term. In August, the annual inflation rate was 3.8%, holding steady at that level from July, which was the highest since January 2024.
• The UK central bank said it would continue to monitor incoming data and adjust monetary policy if needed.
• As the BoE was making its interest rate announcement, President Trump was visiting PM Starmer. The two leaders spoke about trade and geopolitical tensions. They also signed a Tech Prosperity Deal, which will see both sides working together on AI and nuclear power.
• Earlier in the week, tech companies such as Microsoft, OpenAI and others announced they would be spending billions on technology infrastructure in the UK.

The UK central bank is facing an environment of soft economic growth, elevated inflation and rising unemployment. The BoE will carefully monitor data ahead of any future rate decisions. PM Starmer hopes his trade and technology agreements with the US will help boost economic activity in the UK and prepare it for the future.

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