Bank of England holds interest rates at 4%

The Bank of England’s Monetary Policy Committee (MPC) has announced it has voted to hold its base interest rate at 4%.

On 18th September, economists voted seven to two in favour of keeping rates at their current level, with those voting against the decision preferring for a further rate drop. Keeping rates at 4% holds them at their lowest level since February 2023.

The decision follows recent ONS data that put inflation at 3.8% in August, well above the Bank of England’s 2% target rate, but below the double-digit levels seen before interest rates peaked in 2023.

The Bank of England anticipates inflation to rise again in September to 4% before falling again, and has set out that it will continue to pursue a cautious approach to further rate cuts that will stimulate economic growth by reducing borrowing costs for businesses to

Looking ahead, the MPC will next decide on interest rates at the end of October, and then in early December following the Autumn Budget.

MPC members also agreed to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £70 billion over the next 12 months, to a total of £488 billion.