Bank of England Holds Base Rate at 4 %

Today, the Bank of England’s Monetary Policy Committee (MPC) announced that it has decided to maintain Bank Rate at 4%, following its meeting ending on 5 November 2025. 

The decision was taken by a narrow majority of 5-4 in favour of keeping the rate on hold, while the minority favoured a reduction of 0.25 percentage points to 3.75 per cent. 

Why the decision was made this way

The Bank of England has made it clear that progress on disinflation is continuing and that headline inflation has likely peaked. In the November 2025 Monetary Policy Summary the Committee states that “progress on underlying disinflation continues, supported by the still restrictive stance of monetary policy”. 

At the same time, the Committee judged that the risk of inflation remaining persistently high has diminished, while the risk of weaker demand, and hence inflation falling below target, is becoming more apparent. 

In other words, although inflation remains above the Government’s 2 per cent target, the balance of risks is shifting such that a premature easing could leave the economy vulnerable if demand weakens further.

As part of its framework, the Bank sets Bank Rate as its primary tool to meet its statutory remit of keeping inflation on target over the medium term, while supporting growth and employment. 

The fact that Bank Rate remains in what the Committee describes as a “restrictive” position reflects its view that monetary policy still needs to lean against inflation-risks. 

In short, the decision to hold the rate rather than cut it reflects a cautious judgement: inflation pressures are easing, but not yet so far that the Bank is confident it can reduce policy restraint without risking inflation persistence or triggering renewed inflationary pressures.

Effects on businesses and households

For businesses, the decision means borrowing costs remain higher than they would be if Bank Rate were lower. That has several implications. Firms investing in new projects may face elevated financing costs, which could influence decisions about expansion, equipment purchases or hiring. 

In addition, the relatively higher interest rate environment may encourage firms to be more cautious about taking on debt, which could slow investment and growth. On the positive side, the stable rate means firms have some certainty, at least in the short term, about the cost of borrowing, so planning can proceed without the added volatility of a rate change.

For households, the decision to hold the rate affects both savers and borrowers. As the Bank explains, Bank Rate influences what commercial banks charge on loans and pay on savings. 

Those with outstanding loans, in particular mortgage-holders, may find that borrowing costs remain elevated. For variable or tracker mortgages, this means payments will not reduce as a result of today’s decision; if anything, they may remain at current elevated levels or be influenced by other market rate changes. 

In the housing market context, the stability of the rate may temper further upward pressure on mortgage costs, compared to a scenario of further rate hikes, but it does not deliver the relief that would come from a reduction. First-time buyers or those remortgaging should therefore bear in mind that the cost of finance remains a significant factor in affordability.

Closing thoughts

The decision by the Bank of England to maintain Bank Rate at 4% reflects a careful balancing act. Inflation has eased, but not so far that the monetary policy restraint can be relaxed without risk. 

For businesses and households alike, the environment remains one of elevated borrowing costs and moderate savings returns. However, the stability of the rate offers a degree of certainty which in turn allows for planning and budgeting with greater confidence.

If you would like to discuss how this decision may impact your personal circumstances or your business financing, the team at Thomas Oliver would be pleased to help you explore your options. 

Remember, every individual’s circumstances are different and it is important to consider your full financial position, and potentially seek advice, before making major decisions.