The Bank of England has once again held interest rates steady at 5.25%, marking the sixth consecutive meeting without a change. The Monetary Policy Committee (MPC) voted 7-2 in favour of maintaining the current rate, signalling a cautious approach amid fluctuating inflation and economic uncertainty.
What Does This Mean for Homeowners?
For millions of UK homeowners, the decision offers temporary relief but prolongs financial strain. Those on variable-rate or tracker mortgages will continue facing higher repayments, while fixed-rate deals remain costly compared to pre-2022 levels. Analysts suggest borrowers should prepare for rates to stay elevated well into 2025.
Savings Accounts: A Silver Lining?
Savers, however, may benefit from prolonged higher rates. While some banks have already trimmed savings rates, competitive fixed-term accounts still offer returns above 5%. Financial experts urge savers to shop around for the best deals before rates eventually fall.
The Inflation Dilemma
The MPC's decision comes as UK inflation dropped to 3.2% in March - closer to the Bank's 2% target but still above it. Governor Andrew Bailey noted "encouraging signs" but emphasised the need for "firm evidence" that inflation is under control before considering rate cuts.
Economic Outlook
With GDP showing modest growth of 0.1% in February, the Bank faces a delicate balancing act. Cutting rates too soon could reignite inflation, while keeping them high risks stifling economic recovery. Most economists now predict the first rate cut won't come before August at the earliest.
