Bank Of England Holds Rates: What Experts Say It Means For Consumers And UK Economy

The Bank of England kept its base rate at 4% in November after a close five-to-four vote, saying it wanted more evidence that inflation was continuing to fall. The Monetary Policy Committee said inflation had peaked and that progress on disinflation was continuing, helped by slow economic growth and slack in the labour market.

The summary said inflation persistence risks had eased, while weaker demand was now a concern. The Bank added that more evidence would be required on both. It also said that the restrictiveness of monetary policy had already fallen and that further cuts would depend on the inflation outlook. Four members voted for a 0.25-point cut to 3.75%, arguing that disinflation was well established and that keeping rates too high could hurt activity and lead to inflation undershooting the 2% target.

The next rate decision is due on the 18th of December, with many analysts expecting the next cut to come then if inflation continues to fall.

What Do Economists Say?

Victor Trokoudes, founder and CEO at smart money app Plum, said, “Despite some late momentum in the markets that the Bank of England (BoE) would announce a cut, the MPC has decided to keep the base rate at 4% in a close-run result by five votes to four.

“While the most recent inflation print came in lower than expected and below the Bank’s forecast of 4%, it was still 3.8%, and almost double the Bank of England’s target. While the central bank has been criticised for being too data dependent and not having enough of a strategic, forward-looking approach, it would have a huge pivot for them to decrease the base rate with inflation so high.

“Given the BoE’s focus on a ‘gradual and careful’ approach to decreasing rates, it makes sense that it would want more evidence that the previous month’s halt in inflation isn’t a one-off. Add in that with the Budget approaching soon, it’s likely that rate setters would have wanted more clarity over fiscal policy and the opportunity to assess the market reaction to the Budget before changing rates, it was natural for the markets to conclude that a cut was less than a 1 in 3 possibility.

“Nevertheless, economic growth remains slow, and it’s part of the BoE dual mandate to protect and enhance financial stability as well as keep inflation in check. The latest reading from August showed just a 0.1% expansion.

“While the MPC will have welcomed private sector wage growth slowing to its lowest level since 2021, there are concerns that this may be the start of a deterioration in the labour market. Hiring rates have started to stall, with employers reviewing their employment plans as AI solutions have become more developed and widespread, the cost of labour has increased with rising employment taxes, the minimum wage has risen and access to immigrant labour is reducing.

“Those economic concerns mean that if inflation does fall in line with expectations in the next print, then it’s very likely that there will be one further cut in December before the end of 2025.”

How Does This Affect Consumers?

Trokoudes added, “Today, we saw the Bank of England interest rate stay the same at 4%, in line with market expectations.

“Inflation – currently at 3.8% as of September 2025 – remains a concern for both the Bank of England and for people’s wallets. Everyday goods have continued to increase in price, especially food and clothing, alongside recent utility bill rises, people’s financial resilience is being challenged.

“However, holding the base rate at 4% will be disappointing news for variable mortgage holders who will have been hoping for a rate cut to reduce their monthly outgoings. As for remortgagers, all is not lost as they’ve recently seen a slight drop in rates. For example, the average fixed rate for a two-year 75% LTV mortgage in October this year was 4.75%, which has recently dropped to 4.72%.

“Meanwhile, savers can make the most of this hold in the base rate and continue to get inflation-beating returns on the money they set aside. The main high street banks have been slower to pass on increases in the base rate to customers so it’s important to explore other options – smaller banks, building societies, and fintechs are usually quicker to offer higher rates on savings accounts, including Cash ISAs.

“Against a challenging economic background, people are looking for competitive interest rates for their cash savings with tax-free returns. Plum has recently extended its bonus offer to Cash ISA transfer-ins, so customers can get higher returns not just on Cash ISA deposits from this tax year, but transfers from previous years as well.

“That’s all the more important with the Chancellor reportedly considering slashing the Cash ISA allowance in half. It’s also paramount that customers consider a range of options to secure better long-term returns for their money, especially if interest rates return to a downward trajectory, like a Stocks & Shares ISA.”

What Are Other Experts Saying?

Our Experts:

• Islay Robinson, CEO, Enness Global
• Guy Gittins, CEO, Foxtons
• Richard Merrett, Managing Director, Alexander Hall
• Jonathan Samuels, CEO of specialist lender, Octane Capital
• Thomas Cantor, Co-Head of Short-Term Finance, West One Loans
• Julian Jessop, Economics Fellow, Institute of Economic Affairs

Islay Robinson, CEO of Enness Global, said:

“The Bank of England’s decision to hold rates keeps the economy in a holding pattern at a time when renewed momentum is sorely needed. Inflation has now stabilised, yet the cost of capital remains a headwind for businesses and investors alike.

“A modest rate cut would have been a welcome catalyst for growth, improving investment appetite and boosting economic confidence.

“The longer the Bank of England delays, the longer the recovery is likely to be and, with the case for stimulus growing stronger by the day, the markets will now be looking to the next decision for a clear signal of intent.”

Guy Gittins, CEO of Foxtons, said:

“The nation’s homebuyers will not be surprised to see the base rate held today, however, the wider market picture remains encouraging.

“The housing market has demonstrated remarkable resilience throughout 2025, with consistent year-on-year growth supported by stable demand and improving lending conditions.

“With the end of the year fast approaching, we expect this steady performance to continue as motivated buyers and sellers push to complete before the festive period, despite the uncertainty of the upcoming budget.”

Richard Merrett, Managing Director of Alexander Hall, commented:

“While the Bank of England’s decision to hold the base rate may feel cautious, the underlying mortgage market remains highly competitive, with lenders already adjusting products and criteria to support borrowers.

The recent expansion of the Mortgage Guarantee Scheme, together with broader lending improvements, has already begun to enhance affordability and confidence, particularly among first-time buyers and movers navigating the current environment.

Even without a rate cut today, we expect lenders to maintain this positive momentum, keeping the market well-supported as we move towards 2026.”

Jonathan Samuels, CEO of Octane Capital, commented:

“The Bank of England’s decision to hold rates may prove a missed opportunity to provide the wider economy with some much-needed stimulus and, with inflation now holding firm for three consecutive months, the case for a modest reduction is becoming increasingly difficult to ignore.

A further cut would not only have helped ease the cost of living burden but could also have encouraged investment and job creation at a time when business confidence remains fragile.

For the property sector, a sustained period of stability is always welcome, but additional support through lower borrowing costs would undoubtedly accelerate market activity and drive growth.”

Thomas Cantor, Co-Head of Short-Term Finance at West One Loans, commented:

“The decision to hold rates, despite inflation tracking at 3.8% and rising uncertainty in the labour market, underlines the cautious approach the Bank of England is now adopting.

“Although many expected a cut, the decision to pause indicates that the MPC is paying close attention to divided internal views and the political and fiscal backdrop ahead of the Autumn Budget. From a specialist lending perspective, it means finance costs remain elevated and confidence may stay subdued until clearer signals emerge on the next move.”

Julian Jessop, Economics Fellow at the free market think tank the Institute of Economic Affairs, said:

“The Bank of England’s decision to leave interest rates on hold today reflects badly on Government policy choices which have fuelled inflation.

“Fortunately, borrowers may not have to wait much longer. Andrew Bailey appears to have been the swing voter this week. The Governor sided with the majority in keeping rates on hold, but was the least hawkish, and it may not take much more evidence to prompt him to switch. A December rate cut is therefore still very much in play.

“UK interest rates have still been cut five times since last year’s General Election, but this has been part of a global trend. The European Central Bank has cut rates eight times since June 2024.

“The MPC had settled into a pattern of cutting rates every three months alongside each new set of economic forecasts. However, the acceleration in inflation since last October’s Budget has now broken this cycle.

“Most independent observers agree that Government policies have added to inflation, mainly via the pass-through of higher labour costs.

“It is widely accepted that the increases in employers’ National Insurance contributions and in regulated prices, including energy bills and minimum wages, have kept UK inflation and interest rates higher for longer.

“Nonetheless, this month’s Budget offers an opportunity to reverse this trend. A credible plan to repair the public finances and improve productivity would reduce the Government’s cost of borrowing. It would also make it easier for the Bank of England to cut interest rates further, without crashing the economy.”