UK interest rates live: Bank of England holds at 5% after shock US Fed cut
Monetary Policy Committee votes to keep rates on hold
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Your support makes all the difference.The Bank of England has voted against a further cut to interest rates, after the latest UK inflation figures remained stubbornly high.
The nine rate-setters on the Bank’s Monetary Policy Committee (MPC) voted 8-1 to keep the base rate unchanged at 5 per cent, a level which – prior to last year – had last been seen in 2008 during the global financial crisis.
The Bank cut rates from 5.25 per cent last month – the first reduction since 2020, in a move welcomed by squeezed borrowers still suffering from the cost-of-living crisis. The move disappointed savers, however.
August’s inflation was unchanged at 2.2 per cent, which was higher than the Bank of England’s 2 per cent target but was below the 2.4 per cent the Bank itself had predicted at this stage.
Keeping the base rate on hold means mortgage repayments are unlikely to change.
The decision comes a day after the US Federal Reserve voted for a shock 0.5 per cent cut to US interest rates, marking the first drop in four years.
Welcome to our live coverage of the Bank of England’s interest-rate decision due to be announced on Thursday.
Bank poised to hold rates at 5%, economists think
Read more:
Bank of England poised to hold interest rates at 5%, economists say
Most economists think that rate-setters on the Monetary Policy Committee will keep the UK interest rate on hold on Thursday.
Glimmer of hope for borrowers
The crumb of comfort for hard-pressed borrowers is that there will by ample scope for a cut in November if inflation remains below the Bank’s predicted path, writes James Moore:
Inflation steady – but chances of another rate cut are slim
Price rises are below Bank of England forecasts, but problems remain – including the effect of high air fares – explains James Moore
How UK interest rates have changed since 2007:
MPC set to put interest rate cuts on hold
The Bank of England is expected hit the pause button on interest rate cuts after warning it needs to be “careful” not to rush the decision as pressures on inflation linger:
Bank of England set to pause interest rate cuts as ‘cautious tone’ sticks
Experts think that the Bank’s rate-setting committee will likely keep UK interest rates at 5% on Thursday.
How inflation has accelerated or eased for everyday items
August’s inflation was unchanged at 2.2 per cent, higher than the Bank of England’s 2 per cent target but there was a wide variation in the rate across everyday goods and services.
Examples of how everyday costs changed:
Examples of how inflation has accelerated or eased for everyday items
The average price of both petrol and diesel has swung from positive to negative inflation.
Savers £4bn better off thanks to higher easy-access rates
Savers are an estimated £4billion better off following improvements to easy-access rates in recent months, according to the City regulator.
The Financial Conduct Authority (FCA) said the average interest paid on easy-access savings accounts increased to 2.11% in June, up from 1.66% in July 2023, just before it published a review.
It said: “We estimate savers are £4 billion a year better off from higher interest rates as a result.”
A new consumer duty was introduced by the regulator last year, requiring financial firms to put consumers at the heart of what they do, including when designing products and communicating with customers.
In July 2023, the FCA also set out a 14-point action plan to ensure banks and building societies were passing on interest rate rises to savers appropriately, that they were communicating with customers more effectively and that they were offering them better savings rate deals.
The FCA said that while interest rates on savings accounts had been rising, this had been happening more slowly for easy-access accounts.
How inflation news spelled blow for borrowers
Inflation rises to 2.2% for first time this year in blow to interest rate cut hopes
Rise likely spells end for any hopes for further rate cut in September
House price growth slows but rents climb at near-record rate
Annual house price growth has slowed, but private rents continue to climb at a “near-record rate”, according to an Office for National Statistics (ONS) report – as many hard-pressed borrowers know:
Annual house price growth slows but rents climb at near-record rate, says ONS
Growth in house prices slowed to 2.2% in the 12 months to July, from 2.7% annually in June, according to the Office for National Statistics.
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