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The Bank of England kept interest rates at 4.75 percent as it seeks to combat both stubborn inflation and lackluster growth.

In a split decision, most members of the Monetary Policy Committee warned that the recent increase in wages and prices “increased the risk of continuing inflation”, dimming the prospect of a rapid rate cut in 2025.

“We think a gradual approach to future interest rate cuts remains appropriate,” said Andrew Bailey, governor of the BoE. “But with increased economic uncertainty, we cannot be certain when or by how much we will cut rates in the coming year.”

He added that the BoE must ensure that it achieves the “2 percent inflation target on a sustained basis”.

The MPC’s decision, which was in line with forecasts from economists polled by Reuters, comes a day after data showed that Inflation in the UK rose to 2.6 percent last month from 2.3 percent in October.

But three of the MPC’s nine members – deputy governor Dave Ramsden, Alan Taylor and Swati Dhingra – voted for a quarter-point cut due to sluggish demand and a weak labor market.

BoE Staff now expect zero growth in the final quarter of this year, weaker than the November forecast.

“Most indicators of UK near-term activity have declined,” the central bank said on Friday.

It added that risks to global growth and inflation from geopolitical tensions and trade policy uncertainty “have increased materially” – an apparent reference to US president-elect Donald Trump’s plans to increase tariffs on US imports.

Sterling and gilt yields fell slightly after the expected hold. The pound fell to $1.260 after the BoE announcement, although it was still up 0.2 percent on the day.

The yield on rate-sensitive two-year government bonds fell slightly to 4.46 percent.

Traders still expect the BoE to make two quarter-point cuts next year — the same as immediately before Thursday’s decision.

“The vote was more dovish than the market expected, suggesting it’s too soon to price in rate cuts next year,” said Lee Hardman, senior currency analyst at MUFG.

The market currently expects two quarter-point rate cuts next year compared to the four it expected in October.

The BoE cut rates by a quarter point at its last meeting in November, but signaled at the time that another cut would not be possible until 2025. It has cut rates twice in 2024.