Interest Rates Held at 4% Again
The Bank of England has kept interest rates steady at 4% for the second consecutive time, reflecting caution amid persistent inflation and the approaching Autumn Budget.
Impact on Mortgage Holders
Borrowers on variable rate mortgages may feel let down as the anticipated reduction in borrowing costs did not happen. Meanwhile, those seeking fixed-rate deals for home purchases or remortgaging have already seen several lender rate cuts over the past week.
Monetary Policy Committee Decision
The Bank of England’s nine-member Monetary Policy Committee (MPC) voted 5–4 to keep the base rate at 4%. The minority of four members supported lowering the rate to 3.75%.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, commented: “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.”
“While CPI inflation held steady at 3.8% in the 12 months to September, the BoE believes it has peaked and may gradually ease from here, raising hopes of further rate cuts ahead.”
“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.”
Autumn Budget and Tax Hikes
Chancellor Rachel Reeves hinted that tax increases might be introduced in the Budget scheduled for 26 November, due to disappointing economic growth.
Author’s Summary: The Bank of England holds rates at 4% amid inflation concerns and upcoming budget decisions, leaving mortgage rates steady but hinting at possible future cuts depending on tax changes.