The Bank of England (BoE) has kept the key interest rate in the UK unchanged at 5.25 percent. At the start of the week, financial markets were still pricing in a quarter percentage point increase in interest rates. However, a day before the interest rate decision, hopes for a rate break rose after the unexpected fall in UK inflation in August.

The Swiss central bank also unexpectedly kept interest rates unchanged on Thursday in a busy day of central bank meetings. Interest rates did increase further in Norway, Sweden and Türkiye.

Fourfold increase in interest rates

The British central bank was one of the first central banks to raise interest rates in December 2021, raising them fourteen times in a row. The interest rate now remains unchanged at 5.25 percent. This is the highest level in more than fifteen years. Central bank policy makers disagree on interest rate decisions. Five of the nine directors voted not to change interest rates. Four countries favor an increase in interest rates.

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The central banks of Norway and Sweden raised interest rates by a quarter of a percentage point and kept open the possibility of further rate hikes. Norway’s central bank has signaled that markets do not expect a rate cut next year. The Swiss National Bank decided to temporarily suspend interest rates, while economists had predicted an increase of a quarter of a percentage point. The Swiss central bank hinted at the possibility of further increases later this year.

Türkiye cuts interest rates to 30 percent

Turkey’s central bank has again raised interest rates significantly to tackle skyrocketing inflation in the country. There, interest rates rose by 5 percentage points to 30 percent, as expected. In August, Turkey’s interest rate was raised by 7.5 percentage points to 25 percent. In June, Turkey’s central bank, led by a new governor, began changing course on monetary policy, after Turkey kept interest rates low for years despite high inflation under pressure from President Recep Tayyip Erdogan.

Also read | Türkiye’s inflation is rising towards 60 percent