Bank of England holds interest rates - 7th November 2025

Yesterday the Monetary Policy Committee voted 5-4 in favour of holding, rather than cutting, the BoE interest rates at 4%.  

The BoE signalled that inflation has likely peaked, currently sitting at 3.8 % and expected to fall gradually towards the 2% target over the coming months but Governor, Andrew Bailey, indicated that although the risk of persistent inflation has diminished, they still need “further evidence” of it coming down before moving.  

📊 Why it matters 

For borrowers & savers: Holding the rate means that costs of borrowing (e.g. mortgages, loans) remain elevated for now, and savings rates may not drop immediately.  

For the economy: The BoE is balancing two risks - inflation staying too high vs. growth weakening too much. With signs of weaker demand in the economy, they are cautious about cutting too early.  

For markets: The narrow vote and the comments suggest that a cut is possible soon, perhaps in December. Markets are now pricing in a meaningful chance of a cut at the next meeting.  

🔍 Key take-aways  

The narrow 5-4 split shows there is genuine internal debate within the BoE. Some members believe conditions already justify a cut; others want more reassurance.  

Inflation being above target (3.8 % vs target 2 %) means the BoE cannot afford to become complacent.  

The upcoming Government budget on 26th November, which may include tax changes and spending decisions, is influencing the BoE’s strategy: they prefer to see the fiscal backdrop before moving.  

Governor Bailey’s phrasing, “gradual downward path” for rates, suggests that even if cuts come, they may be incremental, not large.  

The next policy decision is scheduled for 18 December 2025.