The Bank of England has voted to keep interest rates steady at 4% following its latest Monetary Policy Committee (MPC) meeting, signalling a cautious approach as inflation continues to ease but economic risks remain.
At the meeting, seven members of the MPC voted to maintain the rate at 4%, while two voted for a cut to 3.75%. The Committee also agreed by majority to reduce the stock of UK government bond purchases by £70 billion over the next 12 months, bringing the total down to £488 billion.
The Bank highlighted that while disinflation has made strong progress over the past two and a half years, upside risks to inflation remain. Consumer price inflation stood at 3.8% in August and is expected to rise slightly in September before falling back towards the 2% target. Pay growth, though still elevated, has slowed and is forecast to decline further through the year.
The MPC noted that UK GDP growth remains subdued, reflecting a loosening labour market and wider economic pressures. Geopolitical and domestic risks continue to weigh on the outlook.
Nathan Emerson, CEO of Propertymark, said the decision will bring some stability to households and the housing market:
“Throughout the world, many central banks have faced considerable pressure to reduce interest rates, and the UK has been no exception. The Bank of England remains in a challenging position to achieve long-term economic growth and not risk disrupting the progress already made.
“Today’s freezing of interest rates will give perspective to current homeowners and provide reassurance to those looking to take a new mortgage product, that costs will generally remain steady for the time being. Ultimately, it would be good to see base rates track downwards. However, it remains positive that we have seen an overall reduction since the start of the year, which has assisted in generating greater affordability for many.”
The Bank stressed that future changes to interest rates will depend on how inflationary pressures evolve, and that monetary policy will remain flexible in response to new evidence. The next interest rate decision is due on 6 November 2025.
