The Bank of England has decided to maintain its base interest rate at 5.25% for the seventh meeting in a row, as policymakers continue to grapple with persistent inflation and economic uncertainty.
The Monetary Policy Committee (MPC) voted 7-2 in favour of holding rates steady, with two members advocating for a cut. This decision comes despite inflation falling to 3.2% in March - still above the Bank's 2% target.
What This Means for Your Finances
For homeowners, the rate freeze offers little immediate relief:
- Tracker mortgage holders will see no change to their payments
- Standard variable rate mortgages remain at elevated levels
- Fixed-rate deals may start to show modest reductions as lenders anticipate future cuts
Savers continue to benefit from relatively high returns, though experts warn these may not last much longer.
Economic Outlook Remains Uncertain
The Bank's decision reflects ongoing concerns about:
- Sticky service sector inflation
- Wage growth running at 6% annually
- Mixed signals from the jobs market
Governor Andrew Bailey noted that while inflation is moving in the right direction, the MPC needs "more evidence" before considering rate reductions.
Expert Reaction
Mark Harris of SPF Private Clients commented: "With inflation proving more stubborn than expected, the Bank is clearly taking a cautious approach. Borrowers hoping for imminent relief may need to wait until August or September."
The Nationwide Building Society reported that house prices rose unexpectedly in April, suggesting some resilience in the property market despite high borrowing costs.
Looking Ahead
Economists now predict:
- Potential rate cuts beginning in late summer
- A gradual reduction to around 4.5% by end of 2024
- Ongoing challenges for first-time buyers
The next MPC decision on 20 June will be closely watched for signs of shifting policy.
