The Bank of England’s Monetary Policy Committee (MPC) has voted by a majority of 6–3 to maintain the Bank Rate at 4.75%.
Three MPC members voted to reduce Bank Rate by 0.25 percentage points, to 4.5%.
A rate cut was not excepted by the markets, as 12-month CPI inflation has increased to 2.6% in November from 1.7% in September. The MPC also said that headline CPI inflation is expected to continue to rise slightly in the near term. Although household inflation expectations have largely normalised, some indicators have increased recently.
Bank of England staff expect GDP growth to have been weaker at the end of the year than projected in the November Monetary Policy Report. The Committee now judges that the labour market is broadly in balance. Annual private sector regular average weekly earnings growth picked up quite sharply in the three months to October, but has tended to be more volatile than other wage indicators.
There remains significant uncertainty around developments in the labour market, the MPC said.
NO SURPRISE
Paul Noble, CEO of Chetwood Bank, said: “Today’s announcement comes as no surprise following yesterday’s rise and general inflation uncertainty after October’s Budget.
“However, while it might not be the cut some suggested, the Bank of England once again provides a sense of confidence. This renewed stability reinforces the notion that now’s a good time for people to consider their savings options and secure the best rates available, especially if the predictions of rate cuts in the future are correct.
“For consumers, it’s important to stay proactive, ensuring that any hard-earned money works as hard as possible in products that suit their needs. As we enter 2025, savers must align their savings strategy with their financial goals for the new year.”
MEASURED RESPONSE
Gareth Lewis, managing director of specialist lender MT Finance, added: “The MPC’s decision to maintain interest rates at their current level is a measured response to the complex interplay of inflation, economic growth, and market stability.
“By holding rates, the MPC is signalling continued vigilance regarding inflationary pressures while providing a sense of stability for businesses and investors. The decision suggests that while progress has been made in managing inflation, the economic environment remains too uncertain for immediate rate reductions.
“For the property market, this represents a moment of strategic patience. Lenders and borrowers can continue to operate within a predictable framework, allowing for measured investment and development strategies.”
NO THIRD TIME LUCKY
Simon Webb, managing director of capital markets and finance at LiveMore, commented: “No third time lucky this month for borrowers on SVRs, trackers or first-time-buyers hoping for a reduction in the Bank Rate again.
“After the increased borrowing announced in the Autumn Budget that set markets in a flurry, and November’s repeated rise in inflation, it’s no surprise that the MPC voted against a base rate drop – for now at least.
“There are many thousands of borrowers aged 50 to 90 plus whose interest-only mortgages have expired – or are about to. They’re finding themselves trapped, paying their lenders’ higher standard variable rates, when in fact they often do not need to.”
DISAPPOINTED BORROWERS
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “While it is no surprise that the Bank of England maintained interest rates at 4.75% given the recent rise in inflation, borrowers will still be disappointed.
“The trend in new mortgage pricing is downwards but mortgage rates are likely to continue to yo-yo over the next three months. Swaps have been gradually falling for a month but all those falls have been wiped out over the past three days.
“It is only when we start getting regular base rate cuts that the market will react favourably and Swap rates will fall. Until then Swaps will continue to fluctuate as much as we have seen over the past 12 months, which makes it harder for lenders to consistently offer lower mortgage rates.”
