Bank of England holds rates at 4% as inflation eases

November 07, 2025 (MLN): The Bank of England (BoE) has decided to keep its benchmark interest rate steady at 4%, matching market expectations. The move, announced on Thursday, marks the second consecutive hold following a series of rate cuts that ended in September.

The Monetary Policy Committee (MPC) reached the decision by a narrow 5-4 vote, with five members supporting no change and four favoring a 25 basis point cut.

In its policy statement, the central bank said inflation has peaked and that underlying disinflation the slowdown in price growth is continuing, supported by the restrictive monetary stance.

“This is showed in easing pay growth and services price inflation,” the Bank noted. “Underlying disinflation is being underpinned by subdued economic growth and rising slack in the labour market.”

The BoE emphasized that it aims to balance the risks to achieving its 2% inflation target sustainably. According to the statement, the risk of inflation remaining elevated has decreased, while concerns about weaker demand dragging inflation below target have grown, creating a more balanced outlook overall.

However, policymakers cautioned that more evidence is needed before making further rate adjustments.

“If progress on disinflation continues, Bank Rate is likely to continue on a gradual downward path,” the Bank added.

The latest figures show UK consumer price inflation at 3.8% in September, unchanged from August but still at its highest level since January 2024.

It shows a cautious approach as it seeks to support growth while keeping inflation in check. Markets will now be watching closely for signals of when the next rate cut might occur, depending on future inflation and labor market data.

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