The Bank of England is widely expected to maintain the base rate at 3.75 per cent when the Monetary Policy Committee (MPC) announces its decision on Thursday, according to financial experts.
Following December’s rate reduction to the lowest level in nearly three years, policymakers now face a more challenging phase in their easing strategy amid ongoing inflationary pressures.
The consensus among analysts points firmly towards a pause, driven primarily by renewed inflation concerns, with the consumer price index (CPI) rate currently sitting at 3.4 per cent.
Charlie Ambler, the co-chief Investment Officer at wealth management firm Saltus, said: “Progress on services inflation and wage growth remains key, and with headline inflation ticking higher last month, the consensus expectation is that rates will be held at 3.75 per cent this week.”
The central bank has slashed the base rate, but is expected to hold at tomorrow’s next MPC meeting
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The central bank’s decision comes as consumer prices climbed unexpectedly towards the end of last year December’s CPI reached 3.4 per cent, climbing from 3.2 per cent and marking the first increase since July 2025.
Speaking to Newspage, Darryl Dhoffer, founder at The Mortgage Geezer, said: “Policymakers are spooked by sticky service inflation and robust public sector wage growth, which signal that underlying price pressures are not yet tamed.”
Bank of England Governor Andrew Bailey has indicated that future base rate reductions represent a “closer call,” suggesting the MPC will adopt a wait-and-see approach.
The economy’s relative resilience gives policymakers room to hold off on further cuts.
The Bank of England recently cut the base rate | PA
Additionally, the full disinflationary effects of tax measures from Chancellor Rachel Reeves’s Budget have not yet materialised, prompting expectations of cautious forward guidance from Threadneedle Street.
Mark O’Connor, a mortgage advisor at Online Mortgage Advisor, said: “Personally I am not expecting the Bank of England to cut rates this time around.
“While the recent rate cuts have been most welcome to borrowers, I do feel that they will leave rates on hold to keep a ‘lid’ on inflation.”
He noted that the unexpected December inflation rise would likely drive the hold decision.
The Bank Rate in recent history | Bank of England
Kundan Bhaduri, an entrepreneur at The Kushman Group, offered a more critical assessment, suggesting the central bank is “terrified” of inflation fuelled partly by government public sector pay agreements.
Tony Redondo, the founder at Cosmos Currency Exchange, anticipates a clear majority voting to maintain current rates, though not unanimously.
Markets have already factored in this expected pause, with traders now looking towards April for the next potential rate reduction.
Michelle Lawson, Director at Lawson Financial, said: “Not much love from Threadneedle Street in Valentine’s month as I think there will be a hold this time around and a spring forward in March with a cut then.”
Savers have benefited from the recent period of high interest rates
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GETTYUnder current projections, the UK’s central bank expects inflation to approach two per cent by mid-2027.
For investors, uncertainty remains the dominant theme, with persistent price pressures and geopolitical risks shaping portfolio decisions.
Mr Ambler noted sustained demand for gold and government bonds in this environment, advising focus on “quality and resilience” alongside selective exposure to interest-rate-sensitive sectors and UK equities where valuations appear attractive.
The Bank of England’s MPC is scheduled to make its latest interest rate announcement midday on February 5.