The Bank of England has decided to follow the lead of the North American Federal Reserve and leave interest rates intact at 5.25%. Although inflation in the United Kingdom remains the highest in the G7, at 6.7%, the data is relatively better than expected at the return of the summer. The monetary policy committee has decided to consequently avoid (for now) what would have been the fifteenth consecutive rise in the “price of money” in the last two years. “Inflation has fallen over the months and we think it will continue to do so,” said Bank of England Governor Andrew Bailey. “We welcome this news, but there is no room for complacency. We need to ensure that inflation falls to normal levels and we will continue to take the necessary decisions to ensure that this is the case.” The decision was not made unanimously, however, and four members of the monetary policy committee (including deputy governor Jon Cunliffe) dissented and came out in favor of a moderate rise of a quarter point, as the European Central Bank recently did. The markets reacted to the Bank of England’s final decision with a slight drop in the pound against the dollar by 0.7%, the lowest level since March. But the decision to temporarily “freeze” rates was expected by the vast majority of analysts and was received with relative relief in the City. “If the medicine is working, what you need is time to avoid the risk of an overdose,” said Kitty Ussher, head of the Institute of Directors. “Previous rate hikes have served to contain inflation, but there are a few red flags that also need to be taken into account.” The fall in GDP by 0.5% in July, after the 0.5% rise in June, is one of those “red alerts”, as is the fall in productivity and consumption. The Bank of England has in fact warned that growth in the last quarter will be lower than expected, and that the trend will probably continue until the end of the year. All these factors have influenced the final decision to maintain rates for the moment, although the central bank has reiterated that the priority objective (shared by the “premier” Rishi Sunak) is to close the year with inflation at 2%. Food prices are finally stabilizing, although the accumulated increase after one year has been 15%, driven above all by basic products such as milk, butter, eggs or oil. Analysts warn however that prices are not falling but are simply “rising more slowly.”