LONDON — The Bank of England held interest rates steady on Thursday, defying many investors’ expectations that it would become the first major central bank to hike rates following the pandemic.

Markets had been uncertain as to whether the Bank would set off on the path toward monetary policy normalization on Thursday or at its next meeting in mid-December, but analysts broadly agreed that a hike was due before the end of the year.

The Bank of England has been monitoring a confluence of crucial data points as inflation remains persistently high while economic growth moderates and labor conditions tighten.

British inflation slowed unexpectedly in September, rising 3.1% in annual terms, but analysts expect this to be a brief respite for consumers. August’s 3.2% annual climb was the largest increase since records began in 1997, and vastly exceeded the Bank’s 2% target.

GDP grew 0.4% in August after an unexpected contraction of 0.1% in July, as staff absences linked to the Covid-19 Delta variant surged.

U.K. job vacancies hit a record 1.1 million in the three months to August, while the average unemployment rate fell. A tight labor market has been supportive of higher wage growth, a message echoed by business leaders in recent weeks.

Speaking to CNBC at the COP26 climate conference ahead of Thursday’s decision, Standard Chartered CEO Bill Winters said he believed that inflation is now structural rather than transitory.

“I see wage pressure pretty much everywhere we go, we see labor shortages, and of course there’s friction costs, that should iron themselves out over time, there’s energy prices, which I think are going to remain high for quite some time because economic activity is strong,” Winters said.

“That to me says that inflation expectations are becoming ingrained.”

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