The Bank of England (BoE) has opted to hold interest rates at their current level of 4.5%.

The move follows last month’s decision by the central bank to cut rates from 4.75%, and two other cuts towards the end of last year which brought down the base rate from a recent peak of 5.25%.

At the latest meeting, the nine members on the BoE’s Monetary Policy Committee (MPC) voted by a majority of eight to one to maintain the base rate at 4.5%. One member was in favour of another cut by 0.25%, which would have taken rates to 4.25%.

In the MPC’s report published today, it stated that that the Committee’s “evolving view” of the medium-term outlook for inflation means it is taking a “gradual and careful approach” to monetary policy. This comes as inflation increased to 3% in January, up from 2.5% in December, which was slightly higher than the MPC had expected in its report last month.

The latest report also stated that while global energy prices have fallen back recently, they remain higher than last year, and as a result the BoE said inflation is still projected to rise further, to around 3.75% in Q3 this year.

Reacting to the base rate decision, deputy CEO at Mortgage Advice Bureau, Ben Thompson, said that the move “shouldn’t give prospective and current homebuyers much cause for concern”.

“A small rise in inflation and a degree of global economic uncertainty calls for a cautious approach, and many people will no doubt feel a sense of relief that the bank is playing it safe,” he added.

“With the Spring Budget almost upon us, all eyes are now firmly on the Chancellor to explore alternative avenues to foster a more accessible housing market and make homeownership a more affordable prospect for aspiring first time buyers.”

Just Mortgages and Spicerhaart CEO, John Phillips, added that the mortgage market would continue to “hold our breath that future cuts are coming”.

“Future cuts couldn’t come soon enough in a mortgage and property market that is still battling clear affordability challenges, not helped by the upcoming change to stamp duty thresholds,” Phillips warned. “On top, we prepare for any potential surprises that may come in the Spring Statement next week.

“Thankfully, lenders continue to play their part to support borrowers and from our perspective, there is still appetite within the market with buyer registrations, valuation requests and mortgage appointment numbers all remaining consistent.”

However, investment manager at Wealth Club, Isaac Stell, warned of economic growth “diminishing by the day” and said some people might question the BoE’s refusal to “get ahead of the curve”.

“With annual inflation reaccelerating in January, the BoE is adopting a wait and see approach,” Stell added.

“Any decision to cut interest rates moving forward will likely be finely balanced between dampening inflationary pressures whilst remaining wary of weakening economic growth. With the upcoming rise in national insurance contributions for businesses coupled with rising prices for consumers, the squeeze on taxpayers will continue to be keenly felt.

“With growth prospects diminishing by the day, and the Spring Statement likely to unleash further pain, many may be asking why the BoE isn’t trying to get ahead of the curve by cutting rates faster.”

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