The Bank of England (BoE) has confirmed it is holding its base rate at 4.75% in its final decision on interest rates in 2024.

It follows the central bank’s move to cut its base rate last month by 0.25%.

At its latest meeting, the Bank’s Monetary Policy Committee (MPC) voted by a majority of six to three to maintain the base rate at 4.75%. Three members were in favour of a further 0.25% reduction, which could have taken rates to 4.5%.

The announcement follows the Office for National Statistics (ONS) reporting this week that CPI inflation had hit 2.6% in the year to November, having crept up from from 2.3% in October, and 1.7% in September.

In the MPC’s report published today, the BoE said it was expecting headline inflation to “continue to rise slightly in the near term”, and that the Committee was continuing to consider “a range of cases” for how the past global shocks that drove up inflation may unwind.

It added: “The MPC is also monitoring the impact on growth and inflationary pressures from the measures announced in the Autumn Budget, and from geopolitical tensions and trade policy uncertainty. These developments have generated additional uncertainties around the economic outlook.”

The latest decision to hold rates has followed two recent cuts by the BoE to the base rate, which were the first rate reductions since the onset of the COVID pandemic in March 2020.

Prior to that, the BoE had increased its base rate from a record low of 0.1% during the pandemic at 14 successive MPC meetings between December 2021 and August 2023, which took interest rates to their recent peak of 5.25%.

Sales and growth lead at Target Group, Melanie Spencer, said that a hold was “always the expected outcome” of the latest meeting, especially following the news on inflation.

“While the uncertain outlook for inflation will remain a worry for the BoE, the overriding feeling is that we will still see a return to cuts in 2025,” Spencer commented.

“It will be interesting to see how swap rates react to this stability and whether it provides lenders with the scope to make even small changes to pricing. We have seen some movement in recent weeks as swaps continue to stabilise post-Budget and the hope for many is that this trend will continue into Q1, with a potential cut in February’s meeting.”

Head of mortgages and protection at Just Mortgages, Ben Allkins, added: “Speaking with our brokers and the lenders we work with, the general consensus for 2025 is positive. There’s no doubt that clear challenges will absolutely remain, particularly around affordability.

“At least a hold on the base rate brings some stability which is always well received by the markets and by swap rates. This may give lenders some leeway to make movements as they look to build their pipeline heading into the new year.”

The BoE’s next base rate announcement is due on 6 February 2025.

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