The base rate set by the Bank of England (BoE) will remain at 5.25% for the sixth consecutive period.

Although analysts have predicted that this will fall as the year progresses, the base rate, which was set at 5.25% for the first time last August, remains at its highest level for 16 years.

In a meeting of the Monetary Policy Committee (MPC), seven of the nine-member board voted to keep the base rate of 5.25%, with two members voting to lower it by 0.25% in order to become "less restrictive".

Prior to the BoE’s recent moves to hold interest rates for six times running, the central bank had raised its base rate at 14 successive MPC meetings since December 2021, a cycle that has helped to slow the rate of inflation and led to higher savings rates but also large increases in mortgage payments.

The news comes as inflation continues to fall from its peak of 11.1% in October 2022 to 3.2% in March 2024, according to the Office for National Statistics.

The latest inflation rate was the lowest since September 2021, with the central bank targeting an inflation rate of 2%.

Chief executive officer at Chetwood Financial, Andy Mielczarek, said: "Any call to race ahead of the fed and cut the base rate early would have been short-sighted. Holding at 5.25% was the right decision by the BoE, as there remains enough uncertainty and stickiness around inflation to merit caution for a while longer.

"The reality is that despite recent decreases in inflation, we have yet to hit the Bank’s 2% target. We are seeing signs that the economic landscape is warming, so we must ensure that we have the stability and resilience necessary for future growth.

"A high-interest environment means difficulties for those with variable mortgage payments contributing to an already-high cost of living, but these are necessary evils for the UK’s economic recovery. As long as the base rate stays high, savers need to shop around to maximise the returns they are getting from the savings market and get their financial goals back on track."

CEO at Market Financial Solutions, Paresh Raja, added: "We’ve known for some time that the BoE would not be cutting rates today. For the past two months or so, the question has been whether the first cut will come in June or August, and then how many cuts will there be by the end of 2024.

"When the base rate falls, and how quickly, remains to be seen. But the bigger picture is that the property market has slowly but surely gone through a period of adjustment over the past two months – the reality has sunk in that rates will not get back to the low levels many borrowers had become accustomed to throughout the 2010s.

"A base rate above 4% is highly likely for the next 12 to 18 months, and the sense of inertia is steadily fading away as buyers and investors decide to re-enter the market. So, now is the time for lenders to be flexible and embrace a ‘can-do’ attitude, ensuring the right products are available to brokers and their clients in a timely manner, allowing fresh life to be breathed into the market."

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