No change in interest rates at 5.25%

The Bank of England has held interest rates at 5.25% for the fourth time in a row.

However, the vote by the central bank’s Monetary Policy Committee (MPC) was split three ways, with six of the nine members voting to keep rates at 5.25%, two wanting to raise borrowing costs to 5.5% and one voting to cut rates by a quarter-point to 5%.

It’s the first time since March 2020 that a member of the rate-setting committee has voted for a reduction, and the first time since March 2008 that the committee has had a three-way split over whether to raise, lower or hold the base rate.

The MPC now expects inflation to fall more quickly this year, while GDP growth is forecast to gradually pick up with an increase of 0.5% by early next year (compared with the previous forecast of zero growth) and 0.8% growth by early 2026.

Commenting after the base rate decision was announced, Bank of England governor Andrew Bailey said: “We have had good news on inflation over the past few months. It has fallen a long way, from 10% a year ago to 4%.

“But we need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates.”