The Bank of England has kept its benchmark interest rate unchanged at 4%, in a move widely expected by economists.
The decision, made by the nine-member Monetary Policy Committee (MPC), was narrowly split, with five members voting to hold the rate and four voting for a cut to 3.75%.
The decision signals cautious optimism within the Bank that inflationary pressures are easing.
In a statement accompanying the announcement, the Bank said “inflation is judged to have peaked,” offering some relief to households and businesses.
Inflation remained at 3.8% in September still well above the Bank’s 2% target but the MPC believes it is now on a downward trajectory.
Governor Andrew Bailey explained that the Bank preferred to wait for further economic data and developments before reducing rates. He said upcoming information on inflation trends, labour market performance, and the government’s forthcoming Budget would be key to future decisions.
While maintaining the rate, the Bank warned that economic growth is expected to slow next year. It now forecasts UK GDP growth of 1.2% in 2026, compared to 1.5% this year, citing weak consumer spending and business investment.
Economists say the decision reflects a wait-and-see approach. With the next MPC meeting scheduled for 18 December, a rate cut before Christmas remains possible if inflation continues to fall and the economy shows further signs of cooling.
For now, the Bank’s message remains steady: gradual adjustments, not sudden shifts, as it balances curbing inflation with supporting growth.
