UK interest rates held at 5%

The Bank of England has today followed through with its widely-expected interest rate hold, keeping the Base Rate at 5 per cent for the second consecutive month.

The Bank had cut the rate from a 16-year high of 5.25 per cent to 5 percent last month – the first reduction since 2020.

At its meeting, the Monetary Policy Committee (MPC) voted by a majority of 8–1 to maintain the bank rate at 5%, with one member preferring to reduce the rate by 0.25 percentage points, to 4.75%.

The decision comes a day after the US Federal Reserve voted for a shock 0.5 per cent cut to US interest rates, marking the first drop in four years.

The Bank of England’s next Base Rate decision will be announced on November 7^th.

Commenting on today’s announcement, Mike Randall, CEO at Simply Asset Finance, said:

“Businesses were hoping for a much needed shot in the arm and have been left disappointed. There remains a huge appetite among UK SMEs to capitalise on pent-up growth and invest in their future. But with economic challenges persisting and business costs are still high, they need more help. All eyes are on the Budget.

“With 5.6 million SMEs forming the economy’s backbone, a concerted effort is required to solve the multiple growth and productivity challenges across the sectors, with businesses needing better incentives, support, and skills to create a robust and sustainable future. The Chancellor’s speech offers a huge opportunity to bolster SME growth and investment – and it’s one she must seize with both hands,” he added.

Neil Rudge, chief banking officer for commercial at Shawbrook, commented:

“The BoE opted not to cut rates this month, indicating it is awaiting stronger recovery signals after last month’s reduction before making any further moves. While this may be disappointing for the business community, it’s crucial to remember that the MPC’s decisions are aimed at ensuring long-term economic recovery and sustainable growth.

“Despite the continued higher costs of borrowing, business leaders remain optimistic. We see robust demand for funding from midsize businesses across a range of sectors, reflecting widespread confidence and a focus on growth among the UK’s SMEs. As economic conditions improve, more businesses with a forward-looking approach are beginning to activate plans that were previously on hold, which is an encouraging sign for the UK economy’s future prospects.”