Bank of England holds interest rates at 4%

The Bank of England (BoE) has held interest rates at 4%, a move that came as no surprise to markets and economists watching closely for signs of a shift in monetary policy.

It marks the final rate decision before Chancellor Rachel Reeves unveils her Budget later this month.

Many analysts believe the next BoE meeting in December could finally bring the long-awaited cut, once the economic impact of the 26 November Budget becomes clearer.

The base rate, which influences the cost of borrowing across mortgages, loans and credit, has not dipped below 4% since early 2023.

Four members of the Bank’s Monetary Policy Committee (MPC) backed a reduction, while five opted to keep rates unchanged.

The decision reflects ongoing caution within the committee, even as recent data shows inflation easing faster than expected, falling to 3.8% in September.

Wage growth has softened, and economic activity continues to cool, prompting calls from business groups and borrowers for a cut to stimulate demand.

The Bank’s December meeting is likely to prove pivotal, setting the tone for 2026 as policymakers balance the need to tame prices with the risk of slowing growth too sharply.

Property sector reaction to the Bank’s decision

Matthew Thompson, the head of sales at Chestertons, said: “As inflation remains above the 2% target and speculations about the impact of the Budget fuel uncertainty over the economic climate, there was little chance of a rate cut today.

“With only one more Monetary Policy Committee meeting scheduled for this year, a rate cut will be more likely in the first few months of 2026.

“Despite today’s decision not to cut rates, market conditions are currently in favour of buyers which is resulting in some house hunters rushing to finalise their search before the end of the year.”

Matt Smith, Rightmove‘s mortgages expert, said: “Ahead of one of the most widely anticipated and discussed Autumn Budgets of recent times, it was unlikely the Bank would go for another interest rate cut so close to the announcement and has opted for stability instead.

“There’s still a good chance of a rate cut before the end of the year, depending on what is announced in a couple of weeks’ time, and if not then we’re looking at early 2026.”

Nick Leeming, the chairman of Jackson-Stops, said: “The decision to hold interest rates at 4% reflects the Bank of England’s need to stem inflation with ongoing caution towards economic growth.

“This wait and see position is one familiar with many homebuyers at the moment, keen to know what the Chancellor’s final decisions are on tax and spending policies before committing to a move.”