Decision widely expected as UK economy struggles with slow growth and rising inflation
The Bank of England (BoE) has maintained the base rate at 4.5%, signalling a cautious stance as it balances inflationary pressures against slowing economic growth.
The bank’s Monetary Policy Committee (MPC) opted to keep rates unchanged after implementing a 0.25% cut in February. Since August, the central bank has gradually lowered borrowing costs, allowing lenders to reduce mortgage rates for some borrowers.
BoE governor Andrew Bailey emphasised the importance of a measured approach, stating that policymakers aim to be “gradual and careful” in adjusting rates while assessing economic conditions in the UK and globally.
Today’s decision aligns with market expectations, with a recent survey by buy-to-let lender Landbay revealing that 76% of specialist brokers anticipated the rate hold.
The UK economy has shown signs of strain, with GDP contracting by 0.1% in January, inflation reaching a 10-month high, and private sector wage growth remaining elevated at 6.2%.
Nicholas Mendes, mortgage technical manager at broker John Charcol, pointed to global risks contributing to economic uncertainty, including trade policy concerns in the United States.
“The potential for new tariffs has unsettled markets, while the UK government’s upcoming Spring Statement could introduce further fiscal tightening, adding to the challenges facing businesses and households,” he said.
He added that although many expected the BoE to hold rates, there had been some hope of a rate cut in the coming months. The Bank of England is forecasted to cut interest rates four times this year. However, policymakers, for now, appear reluctant to ease monetary policy without clearer signs of inflation stabilising.
“With headline inflation rising to 3% in January and expected to climb further by summer, policymakers remain cautious about moving too soon and risking a reversal of progress in stabilising prices,” Mendes said.
“For now, the bank is holding its nerve, keeping a close watch on how economic conditions evolve. With signs of a weakening labour market and ongoing concerns over business investment, the conversation around rate cuts is far from over — but today’s decision suggests the MPC isn’t ready to pull the trigger just yet.”
Any thoughts on the latest base rate decision announced by the Bank of England today? Share them with us by leaving a comment in the discussion box at the bottom of the page.
