LONDON (AP) — The Bank of England held its main interest rate at 4% on Thursday as U.K. inflation concerns weigh on policymakers.

The decision was widely anticipated, as was the split of votes on the nine-member Monetary Policy Committee. Seven of the panel backed the decision, while two voted for a quarter-point reduction to 3.75%.

The minutes of the meeting showed that the majority were concerned about the path for inflation, which remains stubbornly high. Figures on Wednesday showed inflation held steady at 3.8% in the year to August, double the bank's 2% target.

“Although we expect inflation to return to our 2% target, we’re not out of the woods yet, so any future cuts will need to be made gradually and carefully," Governor Andrew Bailey said.

All eyes now turn to the next rate-setting meeting in November. If the bank carries on cutting interest rates once every three months, as it has since August 2024, then it will make a further cut at the next policy meeting in November. It last reduced interest rates in August.

The bank has been cutting interest rates at a gradual pace following the unwinding of the previous spike in inflation in the wake of Russia’s invasion of Ukraine.

However, economists remain split as to whether another cut will be forthcoming since inflation has proven to be stickier than anticipated, partly because of relatively high wage increases.

It's a difficult balancing act for the bank as the wider economy could do with further interest rate reductions given growth remains fairly tepid.

Some economists think that ongoing inflation concerns and uncertainty over the government's upcoming budget will mean there won't be a reduction in November.

The Labour government, which is languishing in opinion polls despite winning a landslide election victory last year, needs the economy to start picking up steam, and will be hoping that further interest rate reductions will be delivered in the coming year. However, Treasury chief Rachel Reeves is widely expected to increase taxes again in the budget, which will be another headwind for the British economy.

“Rate-setters will likely want to assess the impact of any measures announced in the budget before loosening policy again, leaving December as the earliest point at which they may consider cutting rates,” said Suren Thiru, economics director at the accounting institute ICAEW.