Interest Rates Held at 4%: Could a Cut Come in December?
The Bank of England has held interest rates at 4% for the second consecutive meeting, signaling caution amid persistent inflation and anticipation of the Autumn Budget. Borrowers on variable mortgage rates will be disappointed that borrowing costs have not decreased this time.
Meanwhile, those seeking fixed-rate mortgages—either for new purchases or remortgaging—have already seen benefits from lenders lowering rates over the past week.
Monetary Policy Committee Split Decision
The Bank of England’s nine-member Monetary Policy Committee (MPC) voted 5–4 to keep the base rate steady at 4%. Four members favored a reduction to 3.75%, reflecting the ongoing debate within the committee.
“Today’s vote was a close decision, however, with the Monetary Policy Committee split 5-4 in favour of maintaining the current position, underscoring the delicate trade-off between supporting growth and containing inflation,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners.
Inflation and Budget Considerations
Consumer Price Index (CPI) inflation remained stable at 3.8% in the year to September. The Bank of England believes it has reached its peak and could gradually decline, raising expectations of rate cuts in the near future.
“However, with the Autumn Budget landing before the next rate decision in mid-December, any tax hikes could significantly influence the path of monetary policy from here,” added Haine.
Chancellor Rachel Reeves hinted earlier this week that the 26 November Budget may include tax increases in response to sluggish economic growth.
Author’s Summary
The Bank of England’s cautious rate stance and split MPC vote highlight the balance between tackling inflation and nurturing growth, with December’s decision hinging on the Autumn Budget outcome.