The Bank of England (BoE) has opted to keep its base rate at 5.25%, the fourth time in a row the central bank has held interest rates.

At its latest meeting, the Bank’s Monetary Policy Committee (MPC) voted by a majority of six to three in favour of maintaining interest rates at 5.25%. Two of the Committee’s nine members would have preferred a 0.25% increase to 5.5%, while one member voted for a 0.25% decrease, which would have left rates at 5%.

While the UK’s rate of inflation has been creeping down over the last year to ease cost of living pressures for millions of households, the Office for National Statistics (ONS) earlier this month reported an unexpected rise in inflation, back up to 4% for the year to December.

Many economic forecasters are expecting the BoE to cut interest rates this year but with the UK economy appearing to stagnate, the MPC has chosen to keep the base rate at its highest level in 15 years.

In its report published today, the MPC said its remit is clear that the inflation target applies at all times, reflecting the “primacy of price stability” in the UK monetary policy framework.

“The framework recognises that there will be occasions when inflation will depart from the target as a result of shocks and disturbances,” the report stated.

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

Reacting to the BoE’s latest move, chief executive of mortgage and protection network Stonebridge, Rob Clifford, said: “Mortgage lenders spent the first half of January following each other in repeatedly cutting rates; however, this has slowed recently, and today’s base rate decision – and the rise with swaps – will mean we see a more consistent and static mortgage rate environment in the weeks ahead.

“There are many competitive rates available though and this current plethora of product choice, coupled with increasing consumer confidence, presents an optimistic outlook for mortgage brokers. It’s a far better rate environment than the one we were all wading through this time last year, hopefully providing both existing and would-be homeowners with cheaper mortgages than those we’ve seen available in the previous 12 months.”

CEO of Spicerhaart and Just Mortgages, John Phillips, added: “While there’s no doubt the Bank has much to consider, the danger is it takes too long to make a decision and it eventually comes too late.

“Nevertheless, continuity and stability is a positive, especially for those not on a fixed rate deal. While it’s not here yet, a potential cut to base rate on the horizon is certainly helping bring some confidence back to the market, along with continued competition among lenders with rates coming down. We’ve seen this first hand in both our new buyer registrations and in requests for valuations, which are both at their highest point for a number of months.

“With affordability remaining a real stumbling block for many borrowers, it would be fantastic to get to a position where the base rate is improving, lenders are continuing to innovate, and the Government is bringing some much-needed support to the housing market.”

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