The Bank of England has announced the base rate will remain at its current level of four per cent despite pressure from politicians and business to slash the cost of borrowing faster.

Economists were split on whether the central bank would cut interest rates leading up today in light of recent inflation which signaled the consumer price index (CPI) rate was beginning to cool.

However, the Bank of England has determined Inflation has peaked and is expected to fall to nearly three per cent next year before returning to the Bank of England’s target of two per cent in 2027.

Following the Covid-19 pandemic, the Bank’s Monetary Policy Committee (MPC) has opted to hike the base rate to as high as 5.25 per cent in an effort to ease inflationary pressures.

This has since fallen to four per cent, but with the CPI inflation for the 12 months to September 2025 coming in nearly double the Bank of England’s target at 3.8 per cent, policymakers appear to be exercising caution.

James Smith, a UK developed market economist for ING, previously claimed that inflation in the UK “has almost certainly peaked” despite growing concerns over the cost of living.

He explained: “Food inflation – a critical concern at the Bank of England this summer – fell back in September and is now running half a percentage point below official forecasts. This all comes at a time when the Bank is visibly divided on how problematic inflation really is.”

In reaction to the MPC’ latest move, Scottish Friendly’s savings expert Kevin Brown, said: “The Bank of England’s (BoE) decision to hold rates today shows it is still treading carefully despite inflation coming in flat in August.

“That said, a Christmas rate cut now looks likely, with markets pricing in a strong chance of a 25 basis point cut next month. However, we don’t believe that will result in an opening of the floodgates – memories of double-digit inflation are still fresh, and the BoE will want to avoid reigniting price pressures.”

THIS IS A BREAKING NEWS STORY..MORE TO FOLLOW

LATEST DEVELOPMENTS

• Richard Tice calls for ‘big reform’ as Nigel Farage targets public sector pensions and Bank overhaul
• Bank of England ‘deeply divided’ as interest rates expected to remain at four percent
• Bank of England told it ‘must do so much more’ to tackle climate change