Bank of England Holds Interest Rates at 4%
BBC News
This video can not be played
The Bank of England has held interest rates at 4%, in a widely expected move
The decision is taken by the nine members of the Bank's Monetary Policy Committee – four voted for a cut, but five voted to hold
It means borrowers could get an early Christmas present if the Bank decides to cut rates on 18 December, Michael Race reports
In general, the bank cuts the rate when it wants to increase spending by consumers and businesses, and raises it when it wants to control inflation
Inflation was 3.8% in September – well above the Bank's 2% target – but the Bank is confident that it has peaked
How might today's decision affect you and your money? Send us your questions
Edited by Emily Atkinson and Owen Amos, with Michael Race at the Bank of England
Michael Race
Business and economics reporter, at the Bank of England
"We expect this to be the peak," Bailey says on inflation.
But he says risks remain, and the Bank needs to see more evidence inflation is falling before further cuts follow.
You can follow the governor's news conference live at the top of the page.Michael Race
Business and economics reporter, at the Bank of England
Now I am out of the stuffy basement of the Bank of England, I'll be heading across to a nice press conference room to hear more from the Bank's policymakers – including Governor Andrew Bailey.
It's due to start at 12:30 GMT. Stay tuned.
In the statement published alongside its interest rate decision, the Bank of England says "inflation is judged to have peaked". This will come as good news to households.
As a reminder, inflation held at 3.8% in September.
Remember: This doesn't mean prices have stopped rising – they are just rising at the same rate as before.
Dharshini David
Deputy economics editor, at the Bank of England
There is a buzz outside the Bank of England. City workers are taking advantage of unusually mild weather to enjoy lunch outside – there has been a shift in temperature too inside the Bank.
The rate decision was made by the narrowest of margins, and the interest rate panel believes that inflation has peaked.
The Bank’s governor, Andrew Bailey, said he wanted to see if forthcoming developments confirmed this view before cutting rates, weakness in the labour market could also play a part.
While the Bank itself refused to speculate about the contents of this Budget – it noted signs that concerns elsewhere, among consumers and businesses, may be holding back the economy.
With consumer spending remaining cautious, it now expects the economy to grow by less next year (1.2%) than the 1.5% it expects this year – that won’t be welcomed in Treasury.
The interest rate panel will have plenty to evaluate in the Budget – the scale and shape of tax rises, help with energy bills and possibly other cost of living challenges, and increases in the National Living Wage.
The next meeting is in mid-December. By, in effect, holding the casting vote, it’s the governor who may find himself deliberating whether to play Santa – or Scrooge. Michael Race
Business and economics reporter, at the Bank of England
Lots to digest (besides the biscuits) after that lock-in. But, in short, the Bank has narrowly decided to keep interest rates unchanged.
It was a knife-edge vote, with five in favour of keeping rates at 4% and four in favour of reducing them to 3.75%.
The majority have deemed it is best to wait and see how things pan out over the coming months, and particularly after the government's Budget before deciding any future rate cuts.
"Gradual" is the buzz word which has been used for months now, and there appears to be no change in that.
The Bank is confident that inflation, which is the rate consumer prices rise at, has peaked at 3.8% – but that is still a long way above its 2% target.
So, it's no change for now, but there could be an early Christmas present for borrowers if the Bank decides to cut rates at its next meeting on 18 December.
Lucy Hooker
Business reporter
Often there's fierce disagreement amongst the nine members of the Monetary Policy Committee (MPC) over whether it's the right time for a change in rates.
This time four members voted for a cut and five voted against.
Lucy Hooker
Business reporter
A hold was what most observers were expecting.
It means the main rate underpinning the cost of borrowing stays the same for at least another few weeks.
But it does make a rate cut in December more likely.
Policymakers at the Bank of England have just announced their decision.
Interest rates are held at 4%.
We'll bring you more on what this all means shortly. Stay with us.
In just five minutes' time, the Bank of England will announce its latest decision on interest rates.
Most analysts are expecting the rate to hold at 4%, but all will be revealed at midday.
Stick with us for the announcement and analysis from our Money and Work team on what this means for you.Michael Race
Business and economics reporter, at the Bank of England
Interest rates are the Bank's main tool in try to maintain the annual rate of inflation at – or close to – its target of 2%.
The Bank’s base interest rate heavily influences the rates set by high street banks and lenders. The higher level in recent years has meant people are paying more to borrow money for things like mortgages and credit cards, but savers have also received better returns.
About 600,000 homeowners have a mortgage that tracks the Bank’s rate, so rates being cut will have an impact on monthly repayments.
More than eight in 10 customers have fixed-rate deals, but could continue to face higher repayment costs when renewing.
The theory behind increasing interest rates to tackle inflation is that by making borrowing more expensive, more people will cut back on spending and that leads to demand for goods falling and price rises easing.
But it is a balancing act as high interest rates can harm the economy as businesses hold off on investing in production and jobs.Michael Race
Business and economics reporter, at the Bank of England
Depending on your individual circumstances, interest rates can impact you in different ways.
Mortgage holders with variable or tracker mortgages, or those who are looking to secure new fixed-rate deals, will face a change in their monthly repayments if rates are altered.
If rates are higher, it becomes harder generally for first-time buyers, as it becomes more expensive to borrow money for a mortgage.
Higher rates tend to mean increased charges for unsecured loans and credit cards, but people with savings should benefit from higher interest rates and get better returns on their money.
Lower rates, while making it cheaper to borrow, mean banks tend to offer lower returns on savings.
Higher rates could also be good news for those on the cusp of retirement, who might get a better annuity rate.
This determines how much guaranteed income you get, when you swap some or all of your pension pot for a secure income.
For the government though, higher interest rates in recent times have meant it has had to pay more interest on the country's debt.
The cost of government borrowing has been in the spotlight in recent months, with speculation that Chancellor Rachel Reeves could raise taxes in the Budget on 26 November.
Lucy Hooker
Business reporter
Was Chancellor Rachel Reeves's speech this week aimed at the Bank of England?
At least in part, maybe. It is unusual for a chancellor to give a speech like that, containing strong hints about what to expect in the Budget.
She stressed the need to tackle inflation, to allow for lower interest rates. And she left the door open for tax rises – which could be inflationary or deflationary, depending where they fall.
"It's possible Rachel Reeves's surprise press conference on Tuesday was partly a cry for help to the Bank of England," says Danni Hewson, head of financial analysis at AJ Bell.
"By promising to push down on inflation, she might have been signalling that the Bank didn't have to wait until after the Budget to cut rates. Whether they do or not is a finely balanced call."
Put simply, interest is the extra amount you get charged when you borrow money.
Say someone lends you £10 at a 10% interest rate, you'll pay them back £11 – the £10 you borrowed, plus an extra £1 in interest (10% of £10).
The Bank of England's base interest rate, which is being set today, dictates what rates most high street banks and lenders set for things – ranging from mortgages to credit cards and savings accounts.
When the Bank puts up its rate, it gets more expensive to borrow money, but it also means that returns on savings accounts, which accrue interest, go up.
When rates drop, borrowing becomes cheaper and saving rates typically go down.
The Bank of England's job is to keep inflation – the rate at which prices rise for goods and services – at an annual rate of 2%. It uses interest rates to try to keep it at that level.
When rates rise, people and businesses tend to spend less and save more. That slows the demand for goods and services, which can limit price rises and thus cool inflation.
Tommy Lumby
Data journalist
Prices across the UK economy rose by an average of 3.8% in the year to September.
That is almost twice the Bank of England’s target of 2% that it considers a stable pace of increase, though it was also below the 4% that many economists had predicted.
That is probably not enough to have convinced the Bank to lower interest rates today, partly because it will be waiting to see how Reeves’s Budget measures on 26 November affect the economy.
But it has slightly increased the chances of a cut in December.
While it remains high, annual food inflation fell to 4.5% in September — the first time it had dropped since March.
That may provide some hope to households struggling to cover the essentials, and it is also a measure considered by the Bank when thinking about rates.
We've got a crack team of economics reporters on deck with us today, primed to answer your questions on the interest rates decision.
You can get in touch with us in the following ways:
Please read our terms & conditions and privacy policy Michael Race
Business and economics reporter, at the Bank of England
Hello and good morning from the Bank of England in central London.
I’m here to bring you the latest decision on interest rates, which are decided in this beautiful 300-year-old building behind me.
I headed down to the Bank’s basement a little while ago, where along with other journalists, I’m locked in a room for two hours.
We'll be handed a document revealing the Bank's latest interest rate decision. The bets are that there’ll be no change, but no-one will know for sure (apart from those of us in the volt for a short while) until midday.
This rate decision is also a bumper month, as we will be handed another document called the Monetary Policy Report (exciting!), which sets out the Bank's wider thinking on inflation and the wider economy.
I'll do the reading, so you don't have to.
Kevin Peachey
Cost of living correspondent
Good morning.
Policymakers at the Bank of England are widely expected to hold interest rates at 4% following their final meeting before the chancellor's Budget.
Some Bank watchers have suggested that the latest inflation data could strengthen the case for a cut, but most commentators think such a move is more likely in December.
In September, the Bank's governor Andrew Bailey said he still expected further rate cuts, but the pace would be "more uncertain".
The Bank's base rate has an impact on the cost of borrowing for individuals and businesses, and also on returns on savings.
The Bank's Monetary Policy Committee (MPC) will make its latest announcement at 12:00 GMT – join us for that moment, alongside updates, reaction and analysis from our correspondents.
Copyright © 2025 BBC. The BBC is not responsible for the content of external sites. Read about our approach to external linking.