The Bank of England has kept its interest rate at 4% to combat persistently high inflation, which currently sits at 3.8%, above the government’s 2% target. The Monetary Policy Committee (MPC) voted 7-2 to hold the rate steady.

In addition to holding rates, the MPC will slow the pace of its quantitative tightening program, reducing its holdings of government bonds from £100 billion to £70 billion over the next year. This decision was made to address concerns that the bond sales were contributing to instability in the debt market.

Industry Reactions

• Nathan Emerson (Propertymark): The decision provides reassurance for homeowners and those seeking a new mortgage, as costs will likely remain stable.
• Nick Hale (Movera): The move was expected, but a further rate cut could be beneficial in November if the Autumn Budget doesn’t impact spending habits.
• Steve Cox (Fleet Mortgages): The decision to hold the rate is understandable given the economic headwinds and may signal that the path to lower rates will be slower than previously anticipated.
• Matt Smith (Rightmove): The hold was “nailed on” and suggests that expectations for the next rate cut are shifting from late 2025 to early 2026. Despite this, sales agreed are currently higher than during the last rate cut, indicating that rising mortgage rates are not yet deterring buyers.