Interest Rates Held at 4%: Will There Be a December Cut?
The Bank of England has chosen to keep interest rates steady at 4% for the second consecutive time, showing caution amid persistent inflation and the upcoming Autumn Budget. This decision leaves many mortgage holders on variable rates frustrated, as they had hoped for a reduction in borrowing costs.
For those securing fixed-rate mortgages—either for home purchases or remortgages—recent lender rate cuts have already provided some relief over the past week. The Bank’s nine-member Monetary Policy Committee (MPC) voted 5–4 to maintain the base rate, while four members favored a cut to 3.75%.
“Today’s vote was a close decision, however, with the Monetary Policy Committee split 5–4 in favour of maintaining the current position, underscoring the delicate trade-off between supporting growth and containing inflation,” said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners.
Consumer Price Index (CPI) inflation remained at 3.8% in the year to September. The Bank of England expects inflation to have reached its peak and to gradually decline, raising optimism for rate reductions in the near future.
“However, with the Autumn Budget landing before the next rate decision in mid-December, any tax hikes could significantly influence the path of monetary policy from here,” Haine added.
Chancellor Rachel Reeves hinted earlier this week that tax increases could feature in the 26 November Budget amid ongoing economic sluggishness.
Author’s summary:
The Bank of England kept rates unchanged at 4%, weighing inflation concerns against slow growth, while hints of upcoming tax rises could shape December’s monetary outlook.