Bank of England Keeps Base Rate of Interest at 3.75%

The Bank of England Monetary Policy Committee (MPC) has today voted to hold interest rates at 3.75% but mounting signs suggest cuts could follow in the coming months – potentially as early as April – as policymakers weigh conflicting signals from the UK economy. 

 

Members of the Monetary Policy Committee kept the base rate unchanged at its three-year low, after inflation rose for the first time in five months to 3.4% in December. 

 

Markets are pricing the probability of a March cut at 28% probability, with many investors now seeing April as the most likely window for the next move. 

 

MPC members remain concerned about persistent wage growth and inflation pressures with the latest CPI inflation figure being driven higher by factors including tobacco duties and airfares. 

 

Aaron Shinwell, chief lending officer at Nottingham Building Society, said: “Mortgage rates are now at their lowest levels since 2022, creating real opportunities for anyone looking to buy or re-mortgage. Rates have already passed their peak and could gradually edge down over time, which is good news for the 1.8 million borrowers expected to re-mortgage this year and first-time buyers finding a more realistic route onto the property ladder.” 

 

For those people saving towards a deposit, a hold on the base rate provides some stability. Savings rates remain competitive for now, giving people a chance to build their deposit while keeping a close eye on how both savings and mortgage rates change. As rates do ease, that combination of a higher deposit and lower borrowing costs could make a meaningful difference to affordability. 

 

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