Bank of England Holds Base Rate at 4%
The Bank of England has decided to keep the base rate steady at 4%. This rate affects borrowing costs for banks and lenders, influencing the interest rates paid by borrowers and earned by savers.
What the Base Rate Means
The base rate is a key tool used by the central bank to manage inflation, which is the rate at which prices increase. The government sets a target inflation rate of 2% measured by the Consumer Prices Index (CPI).
Recent data shows the CPI inflation rate was 3.8% in the 12 months ending September, unchanged from August but still above the target.
Monetary Policy Committee Decision
The Bank's Monetary Policy Committee (MPC) voted on the rate as follows:
- Five members voted to maintain the rate at 4%.
- Four members favoured cutting it to 3.75%.
"The risk from greater inflation persistence has become less pronounced recently, and the risk to medium-term inflation from weaker demand more apparent. But more evidence is needed on both."
Expert Commentary
Nicholas Mendes, of broker John Charcol, said: "The Bank of England has chosen patience. Inflation is falling faster than expected, wage growth easing, and the labour market clearly softening."
Implications for Mortgages and Savings
Holding the base rate steady means borrowing costs will generally remain stable for now, while savers may still earn moderate interest rates. Future changes will depend on evolving inflation and economic conditions.
Author's summary: The Bank of England has kept the base rate at 4%, balancing signs of easing inflation and economic softness, with future adjustments dependent on upcoming data.