The Bank of England has paused nearly two years of interest rate increases after a surprising fall in U.K. inflation eased concerns about the pace of price rises.

In a development Thursday that few predicted just two days ago, the central bank kept its main interest rate unchanged at a 15-year high of 5.25%. It comes to the relief of millions of homeowners who are facing higher mortgage rates. 

The decision was split, with four of the nine members of the Monetary Policy Committee voting for a hike.

Central banks worldwide appear to be near the end of an aggressive rate-hiking cycle meant to curb an outburst of inflation triggered by the bounceback from the COVID-19 pandemic and Russia’s war in Ukraine. The U.S. Federal Reserve left rates unchanged Wednesday.

Clearly influencing the bank’s decision was news Wednesday that inflation unexpectedly fell to 6.7% in August, its lowest level since Russia invaded Ukraine in February 2022.

Inflation, however, is still way above the bank’s target rate of 2% and higher than in any other Group of Seven major economy.

Higher interest rates, which cool the economy by making it more expensive to borrow, have contributed to bringing down inflation worldwide.

But for many homeowners, the pain has yet to hit. Unlike in the U.S., for example, most homeowners in Britain lock in mortgage rates for only a few years, so those whose deals expire soon know that they face much higher borrowing costs in light of the sharp rise in interest rates over the past couple of years.

Like other central banks around the world, the Bank of England has raised interest rates aggressively from near zero as it sought to counter price rises first stoked by supply chain issues during the coronavirus pandemic and then Russia’s invasion of Ukraine, which pushed up food and energy costs. U.K. inflation hit a peak of 11.1% in October 2022.

As inflation has eased, the hiking cycle looks to be nearing an end.

The Swiss National Bank joined the Fed in holding rates steady on Thursday, but in a busy day for central bank action in Europe, Sweden’s and Norway’s central banks pushed ahead with quarter-point hikes.

The European Central Bank, which sets interest rates for the 20 European Union countries that use the euro currency, last week hinted that its 10th straight hike could be its last. 
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