Five-to-four vote against a 0.25% cut comes as analysts forecast cuts later this year
The Bank of England base rate of interest was held at 3.75% today after the nine-member Monetary Policy Committee voted five-to-four against a cut to 3.5%.
With CPI (consumer prices index) inflation currently at 3.4%, above the BoE’s 2% target, the MPC said it expects CPI to fall to 2% from April, indicating base rate cuts may be likely in the near future.
The base rate is the central bank’s benchmark for charging other banks and lenders when they borrow, and it has an immediate impact on what borrowers pay and what savers earn.
‘Scope for rate cuts this year’
BoE Governor Andrew Bailey said: “There should be scope for some further reduction in Bank rate this year.”
Reacting to the BoE’s decision to hold at 3.75, Emeritus Professor Joe Nellis, economic adviser at MHA, the accountancy and advisory firm, said: “The Monetary Policy Committee (MPC) has opted for caution in the wake of a rise in inflation to 3.4% in December, voting to keep interest rates unchanged at its first meeting of 2026.
“The MPC has judged this uptick to be driven largely by temporary factors rather than a renewed, broad-based surge in inflationary pressure, meaning that hopes of a cut in Spring have not been quashed.
“We may still see multiple rate cuts before the year is out.”
‘Slow but stabilising outlook in 2026’
He added: “For the wider economy, holding rates reinforces expectations of a slow but stabilising outlook in 2026. Expectations for economic growth remain modest, but as inflation falls back over the coming months, real household incomes are expected to recover gradually, supporting consumption.
“Households will take some reassurance from the gradual easing of interest rates since mid-2024, and no imminent return to higher rates means that mortgage and credit costs will not rise again, easing pressure on finances already strained by high living costs. However, the lack of an immediate rate cut means relief will be gradual rather than swift.”
