Bank of England Holds Base Rate at 4.25%

The Bank of England’s Monetary Policy Committee has voted by a majority of 6–3 to hold Bank Rate steady at 4.25%, maintaining its cautious stance amid persistent inflation and mounting global uncertainty. 

The Bank highlighted ongoing elevated inflation, most recently at 3.4% in May and flagged the potential for renewed pressure on prices due to rising energy costs, spurred by escalating tensions in the Middle East.

It also noted signs of softening in the UK labour market and emphasised that monetary policy remains gradual and careful, without being on a pre-set path 

Governor Andrew Bailey commented, “Interest rates remain on a gradual downward path, although we’ve left them on hold today. The world is highly unpredictable. In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation.” 

Three members favoured a 25‑basis‑point cut to 4%, indicating some consensus for lowering borrowing costs later in the year.

Looking ahead, the Bank will monitor developments in inflation, wage growth, and global geopolitical tensions. Markets currently anticipate that the next rate cut could come in August, with potential for further gradual easing through year‑end. 

Errol Hall, Mortgage Adviser in Cricklewood, North London & Saffron Walden, Essex, commented: 

“While today’s hold brings stability for mortgage borrowers, the Bank’s cautious tone suggests that continued support is on its way, but it will be measured. Anyone planning to remortgage or adjust their protection needs can use this breathing space to shop around and lock in current competitive deals.”