The Bank of England (BoE) has kept Bank Rate at 4%, voting 7-2, signalling that August’s may remain a one-off for now. With inflation still above target and core prices proving sticky, the higher-for-longer stance means borrowing costs are set to stay elevated into 2026. For advisers, the focus shifts to guiding clients, helping them position portfolios and financial plans with confidence.
We’ve rounded up expert insight and reaction from across the profession:
Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group, said:
“With Donald Trump in the UK on a state visit, the Bank of England’s MPC decision to hold rates comes at a time when there’s more focus than usual on the UK economy – and at a moment of economic deviation from our transatlantic cousins.
“The Bank faces a difficult balancing act – inflation is currently at 3.8%, significantly higher than the 2% target, and it’s forecast to climb to 4% in September’s data. This keeps significant pressure on British households and policymakers alike. The fact that the decision comes just a day after the Federal Reserve cut US interest rates underlines a potential divergence in policy, reflecting the pressures and priorities facing each central bank. While the two banks are operating in different environments, it also raises questions about how long the Bank of England can resist following the Fed, particularly in the context of the UK’s fragile growth outlook.
“For UK borrowers, today’s hold means repayments remain elevated, particularly for those on variable mortgages or approaching the end of fixed-rate deals. For savers, the outlook is more mixed: cash accounts may still look attractive now, but with inflation above target, real returns are at risk. That makes long-term planning through ISAs and pensions more important than ever to help build long-term financial security.”
Ben Kumar, head of equity strategy at 7IM, said:
“Between a rock and a hard place. If you’re the Bank of England, do you care more about inflation or unemployment? And can you trust the data? There’s also a point where public opinion moves from caring about inflation to infuriated about interest rates – and the only way to tell when that is, is after the fact.
“So, it’s no surprise that the Bank has done nothing today. “Don’t just do something, stand there” can be a great bit of advice. Ultimately, I suspect the Bank will be pushed towards rate cuts and growth by circumstances and the government, although perhaps less … obviously and aggressively than Donald Trump is going with the Fed!”
Adam Ruddle, Chief Investment Officer at LV=, said:
“We expected the Bank of England to maintain the Bank rate at 4%, given the persistence of stronger inflation figures and the uncertainty surrounding the upcoming Autumn Budget.
“The Bank faced a delicate balancing act. On one hand, cooling employment data could justify a rate reduction, yet on the other, inflation remains stubbornly high. Consumer prices have risen by 3.8%, matching July’s pace and marking an 18-month high. While services inflation is beginning to ease, it remains elevated at 4.7%.
“In light of these inflationary pressures, it is likely the Bank will pause the rate cutting cycle, with market expectations currently pointing towards only one rate cut in 2026. This will come as disappointing news for many mortgage holders who had hoped for further reductions over the next 12 months.”
Nick Henshaw, head of intermediaries distribution at Wesleyan, said:
“While today’s decision to hold rates at 4.0% was widely expected, the continued elevated rates driven by stubborn inflation will leave many savers adjusting their expectations on returns.
“For some, today’s decision may create a sense of stability that encourages greater investment risk, others will remain cautious in light of recent volatility across gilt and equities.
“For advisers, the priority must remain proactive communication. Through clear and up to date scenario planning rooted in around long-term goals, and introduction to tools such as smoothed funds, advisers can help balance appetite for risk with the need for growth, giving clients the confidence to make decisions that support their long term financial goals.”
Felix Feather, Economist, at Aberdeen said:
“There were no surprises from the Bank of England today. As expected, the Bank rate was left on hold at 4.0%. The vote spilt of 7-2 also met expectations and is neither an especially dovish nor hawkish signal.
“In addition, the pace of bond sales was trimmed to £70bn, in an effort to limit the impact of quantitative tightening on gilt yields. We continue to expect further cuts in response to labour market softness. Indeed, our base case expectation is for cutting to continue to follow a quarterly cadence. But the risks that the next cut will be delayed beyond November are growing.”
Jeff Brummette, Chief Investment Officer at Oakglen Wealth, said:
“The Bank of England voted to keep interest rates on hold with far greater consensus than last month’s vote, justified by inflation. While an inflation peak is expected in September, the data won’t be confirmed until next month.
“The MPC will be bothered by long-term gilt yields. It’s unclear if this is being driven more by inflation or the UK government’s tight fiscal position, but markets will be hoping for spending cuts in the November budget over any tax rises that might weigh on growth.
“It’s unlikely we’ll see further rate cuts before December but never rule it out – a decision in November’s MPC meeting could still hinge on surprise inflation or labour market data.”
William Marshall, Chief Investment Officer, HRIS – Hymans Robertson Investment Services, said:
“With the hold confirmed, as expected, investors have been more focused on the QT figure. We now know the QT figure will be £70bn from October 2025, which is very close but lower than the consensus 75bn that the markets priced in.
“There were several reasons why the MPC has opted to slow the pace of QT. Their need for policy calibration, dictates that with the BoE moving to a less restrictive monetary stance over the last 12 months, it will not need as much QT to meet its aim.
With fewer gilts set to mature in the coming year, maintaining the £100bn target would require a sharp increase in active sales, from £13bn to c.a. £50bn. On top of this, the gilt market, particularly the longer-dated bonds, is facing pressure amid a decline in natural buyers such as pension schemes. The BoE may be reluctant to exacerbate this by ramping up sales.
“The market reaction has been limited, however, we expect to see increased focus on long-dated gilts, especially as we approach the Budget. Looking forward, advisers should pay close attention to their government bond exposure and consider a more globally diversified approach.”
Charlie Evans, Money Expert at Compare the Market, says:
“As the Bank of England announces to hold interest rates, it’s clear that policymakers are taking a cautious approach to balance inflationary pressures with wider economic recovery. The latest inflation rate of 3.8% in August is likely to be front of mind as it sits at nearly double the Bank of England’s 2% target.
“While borrowing costs have dipped slightly in recent months, mortgage holders may only see minimal relief on their disposable income with no further cuts in the immediate term. Meanwhile, savers are being persistently squeezed by lower returns and inflation continues to nibble away at household finances.
“In this environment, households have little wiggle room so may be considering ways to make savings by prioritising the pay-down of high-interest debt and shopping around for better deals on household bills. Keeping a close eye on spending and building an emergency fund can help households while the cost of living remains inflated.”
