The Bank of England has decided to keep the base rate at 4% with a close MPC vote of 5-4, a move that won’t come as a surprise to most. With inflation still hovering at 3.8% and the 26 November Budget just around the corner, the Bank’s clearly decided that now’s not the time to rock the boat. Instead, it’s holding steady to see what Chancellor Rachel Reeves unveils later this month. For advisers and clients alike, it means a bit of short-term stability, mortgages, savings and investments are all likely to stay on an even keel for now, though December could bring the first hint of a rate cut.
Industry experts share their views on what today’s decision means for advisers and their clients below:
Kevin Brown, savings expert at Scottish Friendly, has commented on the Bank of England’s decision to hold rates:
“The Bank of England’s (BoE) decision to hold rates today shows it is still treading carefully despite inflation coming in flat in August. That said, a Christmas rate cut now looks likely, with markets pricing in a strong chance of a 25 basis point cut next month.
“However, we don’t believe that will result in an opening of the floodgates – memories of double-digit inflation are still fresh, and the BoE will want to avoid reigniting price pressures.
“For borrowers, a hold may sound disappointing, but they have benefitted from lower borrowing costs in recent weeks thanks to a price war among High Street lenders.
“As for savers, today’s decision only brings temporary relief. Savings rates have been drifting down and will likely fall further if the BoE acts next month, so shopping around remains essential.
“Over the long term though, investing provides the greatest potential to outpace inflation. If the Chancellor proceeds with plans to reduce the annual Cash ISA allowance, we expect more savers to look to the stock market – a move that would not only support their own returns but also help fund growth in UK businesses.”
Sarah Pennells, Consumer Finance Specialist at Royal London, responds to today’s Bank of England base rate decision:
“The Bank of England has opted for caution, holding rates steady as inflation remains flat. For now, the Bank is holding off any changes waiting to gauge the Budget reaction and broader economic trends before making its next move.
“The decision will disappoint many mortgage holders hoping for some relief. Our research reveals that over half (53%) of mortgage holders are paying on average £327 more a month compared to a year ago, while 13% of mid-lifers describe themselves as in or near financial crisis.
“For savers, the rates hold offers some short-term stability. However, with Budget speculation – including rumoured ISA reforms that could cut the Cash ISA allowance – now is a good time to review savings strategies. Exploring investment options like stocks and shares could help make money work harder, particularly if inflation remains sticky. And with savings rates still relatively high, shopping around for competitive accounts remains essential.”
Kris Brewster, Director of Retail Banking at LHV Bank:
“A hold at 4% is good news for savers as long as they continue to research the market and make the best use of the higher returns still available. The longer-term expectation is that rates will continue on the downward trajectory which began in August 2024 with some economist outliers believing it could go as low as 3 to 3.25% over the next two years.
“The tough inflationary climate is making it harder than ever to manage everyday spending and rising costs. It’s critical that consumers shop around now for the best rates on their interest-earning current and savings accounts while some providers still offer solid returns. Look for deals that reward your
banking choice and work your money harder.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“Over the last few weeks, speculation had been growing that the Bank of England might cut interest rates today. But a decision to keep rates on hold was always more likely than not and clearly the decision was very close. With inflation and wage growth moderating, and the budget likely to deliver tax increases, a cut in December looks increasingly likely. We think interest rates will then come down further through next year as well.”
Lindsay James, investment strategist at Quilter:
“With predictions of a rate cut at today’s meeting growing louder by the day, the Bank of England has blocked out the external noise and chosen to hold rates at 4%. Governor Andrew Bailey effectively had the casting vote and given he has been seen to be sitting on the fence regarding this rate decision, it is perhaps no surprise he has taken a more cautious approach, particularly given the UK continues to suffer from higher inflation compared to peers.
“A month ago, a rate cut by year end was seen as just around a 25% probability but is now given a more than evens chance. Inflation climbed through the summer, with food inflation exceeding 5%. This had been a concern for the committee as because it is a frequent consumer ‘touch point’, it can have more influence on consumer inflation expectations than other areas. Higher expectations typically mean higher wage demands and thus higher prices, in what is known as the dreaded ‘wage price spiral’.
“However, the latest inflation report was more encouraging, and the BoE believes inflation has peaked, potentially opening the door for a pre-Christmas rate cut. Food inflation fell back to 4.5%, below the expectations of the BoE. This has been driven both by supermarket discounting but also because core ingredients like diary goods, cocoa and sugar have seen prices falling back in recent months. Similarly wage growth in the private sector has been coming down amid a weaker labour market, with wages an important contributor to services inflation.
“This will be a blow to Rachel Reeves and the government in the lead up to the Budget. The economy continues to hold up with GDP growth in 2025 expected to land at around 1.5%, but 2026 is looking increasingly challenging. Government spending is expected to grow more slowly, while the jobs market continues to weaken. With a fresh set of tax hikes incoming, the Chancellor would have liked to have been in a position where rates were below 4%. Instead, she will have to hope for further falls in inflation to pave the way for additional cuts to the base rate. For now, it is up to her Budget to help stimulate the economy noticeably, but as her speech earlier this week suggested, the government will be acting in the opposite direction.”
Maike Currie, VP of Personal Finance at PensionBee, comments:
“With inflation staying sticky, particularly food prices, and uncertainty mounting ahead of what could be one of the most consequential Budgets in living memory, the Monetary Policy Committee took a cautious approach. Today’s decision was closely contested, making a rate cut in December more likely.
“The key factors to watch remain food prices, global supply chain pressures, geopolitical uncertainties, and international trade tensions. While some parts of the economy may need support to stimulate growth, the Bank is balancing this against broader inflationary pressures.”
Currie adds that as ever the Bank’s decision has mixed implications for savers and borrowers. “There are always winners and losers. On the savings front, variable rates are likely to remain stable, reflecting the Bank’s hold, while fixed rates face competing pressures. Expected rate cuts suggest downward pressure, but rising bond yields push rates up, which should result in minimal movement overall.
“As for mortgages – banks continue to navigate volatility in the mortgage market. Some have cut rates, others have raised them, and some have done both. Fixed-rate deals, in particular, reflect the tension between anticipated cuts and rising bond yields.
Currie concludes: “Overall, today’s decision highlights the delicate balancing act facing the Bank of England and underscores the need for individuals to remain alert to opportunities and risks in their personal finances.”
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, said:
“Today’s decision by the Bank of England to hold interest rates at 4% comes as the Chancellor faces heightened scrutiny ahead of the Autumn Budget. While some had expected the Bank to cut rates to stimulate economic growth, this decision to pause reflects its ongoing caution as inflation remains sticky at 3.8%, well above the 2% target. The move highlights the delicate balancing act policymakers face – maintaining support for the economy without reigniting price pressures.
“For borrowers, the decision means the status quo continues for now. Those on variable-rate mortgages or coming to the end of fixed deals won’t see immediate relief, but stability in rates may help lenders regain confidence and improve competition over time. Borrowers should continue to review their options closely, especially if future rate cuts remain on the horizon.
“For savers, a hold will come as welcome news after months of speculation about rate reductions. It means savings rates are likely to remain steady for a little longer, giving people more time to benefit from higher returns on cash. However, with inflation still above target, real returns remain under pressure – so it’s worth considering long-term investments that offer the potential to outpace inflation. Pensions continue to be one of the most tax-efficient and resilient ways to build long-term financial security, even in a period of economic uncertainty.”
Nick Flynn, Retirement Income Director at Canada Life UK said:
“Just a few weeks ago, a pre-Budget base rate reduction by the Bank of England seemed unlikely. However, weaker-than-expected economic data in October, combined with expectations of a future downward trajectory for inflation, made it a real possibility.
“Ultimately, the Monetary Policy Committee (MPC) decided to hold the base rate steady. However, the 5-4 vote among MPC members suggests a change could be on the near-term horizon. Attention will now turn to the final MPC meeting of the year, which will help set the tone for market expectations in early 2026.
“Those considering an annuity can still take advantage of the current competitive rate environment. With the certainty of a guaranteed income for life, annuities continue to be an attractive option for retirees looking to secure their financial future and support their loved ones, especially as the outlook for pensions and tax rules continues to evolve.”
Commenting, Alex Race, Chartered Financial Planner at Rathbones, says: “The last interest rate decision before the Budget offered no reprieve for the Chancellor, who may have been hoping for a cut to ease the fiscal conundrum. Lower borrowing costs could help boost consumer spending and encourage the business investment needed to support much needed economic growth.
“If, as in September, inflation cools more quickly than anticipated, the Monetary Policy Committee could sneak in a rate cut before Christmas – but that remains a big if.
“For households, this continued pause is unlikely to trigger a dramatic shift in the mortgage market, while savings rates appear to be on a downward trajectory.”
Nick Henshaw, Head of Intermediaries Distribution at Wesleyan, said:
“With rates holding steady, many clients will be weighing up whether cash remains the best place for their money, particularly if they’re seeing the real value of savings eroded by inflation. For advisers, this creates a prime moment to explore how diversified investments can offer stronger long-term outcomes than simply staying in cash.
“And with the Autumn Budget approaching, some clients may be holding back from long-term decisions altogether, preferring to wait and see how any tax or allowance changes could affect their wider finances.
“While some clients may still be nervous about market volatility, tools like Wesleyan’s With Profits Fund can help smooth out the ups and downs, providing a more stable journey to long-term growth.
“In this period of relative stability, proactive conversations and clear, tailored advice are key. Advisers can help clients make confident, informed decisions about where to invest next, ensuring their money continues to work effectively for them.”
Wealth management firm Evelyn Partners’ bond strategist Esther Watt, comments:
‘Although widely anticipated and priced in, the vote saw a 5-4 split in the monetary policy committee with Taylor, Dhingra, Ramsden and Taylor all voting for a 25bp cut to 3.75%. This is more dovish than the 6-3 split expected and reflects some recent soft data on the real economy, a lowering of inflation expectations, and some slack in the labour market. Some MPC members will be deferring judgement until they see the contents of the Chancellor of the Exchequer’s highly anticipated Autumn Budget.
‘The Bank lowered its GDP forecast for 2025 Q4 and 2026 Q4 to 1.4% (from 1.5% and 1.3%) while increasing 2027 Q4 to 1.7% (from 1.6%). It lowered CPI forecasts for 2025 Q4 to 3.5% (from 3.6%) while keeping 2026 Q4 and 2027 Q4 at 2.5% and 2% respectively. Unemployment is expected to be marginally higher over all periods – at 5% (from 4.9%) for 2025 Q4 and 2026 Q4 and 4.9% (from 4.8%) in 2027 Q4.
‘In the seven weeks since the last MPC meeting, while the final read of the second quarter GDP print was revised up to 1.4% (1.2% prior and surveyed), economic data has shown signs of weakening. Inflation surprised for the September period by holding steady at 3.8% as opposed to peaking at 4.0% the BoE expected. Further to this, through August private sector pay growth continued to slow to 4.4% (4.7% prior; 4.5% surveyed) and unemployment surprised to the upside at 4.8% (4.7% prior; 4.7% expected). As a result, market expectations for the next interest rate cut had shifted forwards to February 2026 as opposed to April.
‘In addition to the updated forecasts, the BoE implemented changes recommended by former Federal Reserve Chair Ben Bernanke’s review of the Bank’s forecasting, decision-making process and communication of policy in times of high uncertainty. A new Monetary Policy Overview section was included within the report as well as analysis of the risks and scenarios surrounding the current economic outlook and, perhaps of most interest to Central Bank watchers, more detail of the nine members views.
‘While this meeting will be taken as a dovish hold, markets are little moved.’
Mark Michaelides, Molo’s CCO, comments:
“In one of the most eagerly anticipated rate decisions in some time, the BoE decided to keep rates flat at 4%, resisting putting the cart before the horse ahead of the 26 Nov budget.
“However, the knife-edge voting decision (again), and increasing confidence that both pay and services inflation is under control, makes a December rate cut look very likely.
“Assuming the 26 Nov budget delivers on fiscal discipline as anticipated, we expect a December rate cut to further stimulate the property market as we head into 2026.”
