The Bank of England left its key interest rate unchanged Thursday, slowing but likely not ending a series of reductions in borrowing costs, as inflation remains stubbornly high despite a weak economy and a cooling jobs market.

The U.K.’s central bank left its key rate at 4%, breaking a pattern that dated back to August 2024 and involved making one, quarter-point rate cut every three months. It last reduced borrowing costs in August.

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Other European central banks have also left their key rates unchanged at recent meetings. However, in contrast to the European Central Bank and Sweden’s central bank, the BOE signaled that further cuts are likely over coming months.

“We still think rates are on a gradual path downwards, but we need to be sure that inflation is on track to return to our 2% target before we cut them again,” said Andrew Bailey, BOE governor.

The decision was the result of a tight vote, with four of the Monetary Policy Committee’s nine members voting to cut the key rate for a sixth time.

Like their counterparts at the Federal Reserve, policymakers are seeking to balance a recent pickup in inflation against a cooling jobs market, and MPC members hold differing views about which of those developments pose the greatest threat to the central bank’s inflation target over the coming years.

Inflation has picked up in the U.K. this year, but has mostly been driven by government policy—such as higher water bills—rather than strengthening consumer demand. That is similar to the acceleration in U.S. inflation, which is the result of higher tariffs.

At the same time, the jobs market appears to be cooling, as it is in the U.S., suggesting that inflation will ease in 2026.

However, the acceleration in prices has been sharper in the U.K., with inflation recorded at an annual pace of 3.8% in each of the three months through September, having been as low as 2.6% in March. In the U.S., inflation has edged up to 3% from a recent low of 2.3% in April.

That may explain why BOE policymakers reached a different conclusion to their counterparts at the Fed, who last week lowered their key rate to between 3.75% and 4%.

The BOE’s decision was expected. After the August cut, some swing voters such as Bailey signaled a readiness to slow the pace of rate cuts, reflecting concerns about the impact of high inflation on expectations.

In new forecasts, the U.K.’s central bank said it expects the annual rate of inflation to cool in 2026 and reach its 2% target in the second quarter of 2027. It continues to expect the economy to grow at a weak pace and said the unemployment rate will likely peak at 5.1% in the second quarter of next year, up from 4.8% in the three months through August.

New plans for taxation and government spending to be announced late this month may alter the inflation outlook. Big tax rises are expected to help the government contain rising debts, but they could reduce household spending power and ensure an earlier return to target for inflation.

The pound weakened, and government bond yields fell immediately after the BOE’s decision was announced, an indication that investors view a December move as more likely than they previously had.

“A deflationary budget focused on income and reformed property taxes would open the door for a rate cut in December, and potentially another two rate cuts next year,” said Thomas Pugh, an economist at business services firm RSM.

In a news conference, Bailey signaled that a cut before the end of the year is possible. By the time policymakers next meet on Dec. 18, inflation data for October and November will have been published.

“Leading up to our December meeting we will get more data on inflation to help us make the right decision, and we will be able to analyze how this year’s budget might affect the economy and the outlook for inflation,” Bailey said.

Write to Paul Hannon at paul.hannon@wsj.com

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