The Bank of England (BoE) has opted to maintain interest rates at 5.25% for the sixth meeting in a row, as policymakers continue their balancing act between taming inflation and avoiding a deeper economic slowdown.
The Monetary Policy Committee (MPC) voted 7-2 in favour of holding rates steady, with two members preferring another 0.25 percentage point increase. This decision comes despite inflation remaining stubbornly above the Bank's 2% target, currently standing at 3.2%.
Bailey Signals Caution on Rate Cuts
Governor Andrew Bailey struck a cautious tone, stating: "We need to see more evidence that inflation will stay low before we can consider cutting interest rates." The Bank now predicts inflation could fall slightly below target in two years' time.
Political Pressure Mounts
Shadow Chancellor Rachel Reeves seized on the announcement to criticise the government's economic record: "Working people are paying the price for 14 years of Conservative economic failure." The opposition argues that high borrowing costs are squeezing households and businesses unnecessarily.
What This Means for Consumers
- Mortgage holders face continued high repayments
- Savers benefit from better returns on deposits
- Business borrowing costs remain elevated
Economists now expect the first rate cut to come in August or September, though much depends on upcoming inflation data. The Bank emphasised it will "remain vigilant" against persistent price pressures.
