The Bank of England as expected has left interest rates unchanged at 4.5%
The Monetary Policy Committee voted by a majority of 8-1 to hold the rate
The decision will be seen as a blow to mortgage borrowers amid mounting uncertainty in the global economy over Donald Trump’s tariff war
“Other geopolitical uncertainties have also increased and indicators of financial market volatility have risen globally. The German government has announced plans for significant reform to its fiscal rules.” said the Bank adding
“While UK GDP growth estimates have been slightly stronger than expected at the time of the February Monetary Policy Report, business survey indicators generally continue to suggest weakness in growth and particularly in employment intentions. In recent quarters, subdued activity has been judged to reflect both demand and supply factors.”
The University of Salford’s Business School macroeconomist, Dr Charles Nimoh, comments: “As anticipated, the Bank of England has decided to hold the base interest rate at 4.5%. No surprises, just another cautious step from a central bank that appears determined to wait and see.
“This is a classic case of playing it too safe. Inflation has been decreasing, economic growth is sluggish and businesses are in desperate need of support. Yet, here we are, stuck at 4.5% as if the bank is hesitant to take any action. Yes, they want to be sure inflation stays under control, but holding rates this high for too long risks suffocating growth, when we are already observing indications of this.
“For homeowners, mortgage rates are likely to remain elevated for longer. Those on variable-rate mortgages will continue to feel the squeeze, while anyone hoping to refinance or get onto the property ladder will have to navigate costly borrowing conditions. It’s a frustrating scenario – especially when wages aren’t keeping pace with inflation.
“Keeping rates high is meant to keep spending in check, but the knock-on effect is clear: businesses hesitate to invest, consumers tighten their belts and the economy slows. The cost of living remains stubbornly high, and many households aren’t feeling the supposed benefits of easing inflation because essentials like food, rent and energy bills remain expensive.
“Adding another layer of uncertainty is the global economic picture – specifically Trump’s latest economic policies, which could disrupt international markets, drive up inflation and force central banks (including the Bank of England) to rethink strategy. If global supply chains take a hit or market confidence wavers, the UK could find itself dealing with inflationary pressures that are completely out of its control.
“I don’t see the bank holding at 4.5% for much longer. The economy needs a push and with inflation expected to continue easing, I would bet on a rate cut by early summer. By the end of the year, I predict we will see rates closer to 3.75% – maybe even 3.5% if economic conditions worsen. If I was calling the shots, I would push for a gradual but decisive approach. Instead of waiting for inflation to be at 2%, why not start easing now in small, controlled steps? A quarter-point cut today would have sent a positive signal to businesses and homeowners alike.”
