The Bank of England has confirmed the base rate will remain at its current level despite growing inflationary concerns and pending hikes to energy prices.
Earlier today, the central bank’s Monetary Policy Committee (MPC) voted to keep the cost of borrowing at 3.75 per cent; having been at this level since December 2025.
Policymakers voted by a majority of six-to-three to maintain interest rates at 3.75 per cent, with three members voting to increase borrowing costs by 0.25 percentage points, to four per cent.
In its statement, MPC members cited the “protracted conflict” in the Middle East, with the US-Iran war causing a jump in energy prices.
The Bank of England has made another base rate announcement
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As well as this, the committee cited the recent hike in inflation to 3.1 per cent, which is expected to continue in an upwards direction for the foreseeable future.
Following the Covid-19 pandemic, the Bank was forced to raise the base rate to as high as 5.25 per cent to control the consumer price index (CPI) rate.
Across the pond, the US Federal Reserve opted to raise its own base rate for the first time in three years to a range of 3.75 per cent to four per cent.
Analysts are already pricing in around four hikes to interest rates over the next 12 months, which would return borrowing costs to nearly five per cent.
The Bank of England’s base rate has fallen to 3.75 per cent in recent years | GETTY/ GB NEWS / BANK OF ENGLAND
High prices will lead to inflation, as well as rising energy bills this winter | PA
Jason Hollands, Managing Director of investment platform Bestinvest, said: “Today’s decision by the MPC to keep interest rates on hold was widely expected, despite data this week that showed headline inflation nudged up to 3.1 per cent last month and yesterday’s hike by the US Federal Reserve.
“A rate hike today would have been a genuine shock, given subdued core inflation, earnings data that suggests price pressures are not yet feeding into higher wage demands, and the Bank’s relatively dovish messaging.
“However, the odds on a hike at the next meeting on November 5 are shortening rapidly.”
Chris Cheverall, head of UK at CMC Markets, said: “The decision to hold rates at 3.75 per cent should not be mistaken for an all-clear on inflation.
“The backdrop of elevated energy prices and the subsequent feed-through into other areas of the economy, mean further rate hikes cannot be ruled out.
“Inflationary pressures cannot simply be written off as transitory, particularly while the energy outlook remains so uncertain.
“The cost of higher-for-longer rates is already being felt by consumers, with tighter borrowing conditions increasing pressure across household and corporate finances.”