The Bank of England has held interest rates and signalled there are unlikely to be cuts anytime soon.
It is the third time in a row that the UK cost of borrowing remained unchanged at 5.25% – a 15-year high.
The Bank said interest rates would have to stay higher to slow the pace of price rises, or inflation.
That contrasts with the US Federal Reserve which, on Wednesday, suggested interest rates could fall significantly next year.
The Bank has lifted interest rates 14 times since December 2021 to cool soaring inflation, fuelled by higher energy and food prices.
While price rises have eased to 4.6%, that is still more than double the Bank of England’s 2% target.
Bank of England governor Andrew Bailey, said: “We’ve come a long way this year and successive rate increases have helped bring inflation down from over 10% in January to 4.6% in October.
“But there is still some way to go.”
In the minutes from the Bank’s rate-setting committee meeting, it said interest rates would need to remain higher “for sufficiently long” to return inflation to 2%.
It also signalled that interest rates could even rise “if there were evidence of more persistent inflationary pressures”.
The Bank said it expected inflation to remain near to its current rate “around the turn of the year”.
Like Mr Bailey, Jerome Powell, chairman of the US Federal Reserve, also appeared cautious in the outlook for US interest rates after the central bank voted this week to keep them on hold.
He said: “It is far too early to declare victory. There is a lot of uncertainty and we’ve seen the economy move in surprising directions so we’re going to need to see further progress.”
But in the US, inflation has slowed more rapidly and in separate forecasts by members of the Fed’s rate-setting panel showed they expected the key borrowing costs to fall by as much as 75 basis points next year.
Looking ahead, the Bank of England said that it expected no economic growth for the final three months of the year.
On Wednesday, new data showed that the economy – which is measured by gross domestic products (GDP) – shrank by 0.3% in October.
“Bank staff expect GDP growth to be broadly flat in the fourth quarter and over the coming quarters.”
