The Bank of England (BoE) has held interest rates at 4.75%, following a 6:3 vote by the Monetary Policy Committee (MPC). This decision comes as inflation rose for the second consecutive month, reaching 2.6% in November, up from 1.7% in September, exceeding the BoE’s 2% target.
Three members of the MPC advocated a 0.25% cut to support anaemic growth, with GDP down 0.1%, but were overruled. Businesses are bracing for rising costs, including an employer national insurance hike from April.
Despite weak growth, the BoE noted that “most indicators of UK near-term activity have declined”, but inflationary pressures remain a concern. It plans a “gradual approach” to monetary policy changes, suggesting that interest rate reductions are unlikely until late 2025.
Chancellor Rachel Reeves said: “We want to put more money in the pockets of working people, but that is only possible if inflation is stable, and I fully back the Bank of England to achieve that.”
The next MPC meeting is scheduled for 6 February 2025.
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