BoE holds interest rates at 4% ahead of Budget

The Bank of England (BoE) has voted to keep interest rates steady at 4% ahead of the upcoming Budget announcement on 26 November. 

The bank’s Monetary Policy Committee (MPC) voted by a majority of five to four to maintain the rate, with four members voting to reduce it by 0.25 percentage points, to 3.75%.

The bank had previously voted to hold interest rates steady at 4% in September amid concerns around the rise in inflation.

CPI Inflation previously remained unchanged at 3.8% in September. The September, August and July 2025 figures have been the joint-highest recorded since January 2024, when the rate was 4.0%.

An easing of food price rises was countered by an increase in transport inflation, notably air fares.

In its latest update, the bank said that inflation is “judged to have peaked”, adding that “progress on underlying disinflation continues, supported by the still restrictive stance of monetary policy”. 

Andrew Bailey, governor of Bank of England, said: “Upside risks to inflation have become less pressing since August, and I see further policy easing to come if disinflation becomes more clearly established in the period ahead. Recent evidence points to building slack in the economy, and the latest CPI data were promising. 

“But this is just one month of data. Labour costs remain elevated and wage growth, while on a downward path of late, may plateau. In assessing the outlook, I find the mechanisms underlying upside risks less convincing than those underlying the downside.”

In a speech earlier this week, chancellor Rachel Reeves said: “The choices I make in this Budget, this month, will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living.”