Bank of England leaves interest rates on hold
By Abigail Townsend
Date: Thursday 06 Nov 2025
(Sharecast News) - The Bank of England left interest rates unchanged on Thursday, as widely expected.
At its final meeting ahead of the Budget, the rate-setting Monetary Policy Committee voted by a majority of five-to-four to leave the cost of borrowing at 4%.
Four members, including long-term doves Alan Taylor and Swati Dhingra, backed reducing Bank Rate by 25 basis points to 3.75%.
Governor Andrew Bailey and chief economist Huw Pill favoured the status quo.
Although economic growth remains sluggish, the BoE is also battling persistently sticky inflation.
The consumer price index currently stands at 3.8%, off recent highs but still well above the BoE's long-term target of 2%.
However, the MPC flagged that further cuts to interest rates remained on the cards.
In minutes accompanying its decision, the committee said: "CPI inflation is judged to have peaked. Progress on underlying disinflation continues, supported by the still restrictive stance of monetary policy.
"Underlying disinflation is being underpinned by subdued economic growth and building slack in the labour market."
It concluded: "If progress for disinflation continues, Bank Rate is likely to continue on a gradual downward path."
Following an overhaul of the minutes, individual members are now able to explain their vote.
Dhingra said: "My view remains that Bank Rate should have been lower already to account for lags in its transmission to the real economy.
"Policy is overly restrictive and could exacerbate risks from weak demand and reduced supply."
The Confederation of British Industry backed the MPC's decision.
"The hold is understandable," deputy chief economist Alpesh Paleja said. "The committee wants to wait out the autumn peak in inflation and see if household's inflation expectations ease from still-high levels.
"The bank will also be waiting for clarity from the Budget, its impact on growth and inflation outlook and how pay settlements for next year are shaping up."
Chancellor Rachel Reeves is due to present her Budget on 26 November. She is widely expected to hike taxes, despite sluggish economic growth, as she battles soaring government spending and mounting debt.
Neil Wilson, UK investor strategist at Saxo Markets, said: "The calculation is that it's best to wat until after the Budget before moving - no big risk in waiting six weeks. But equally, I would argue, why wait?
"The bank must be acutely aware of a big fiscal drag on the economy contained within the Budget and could get ahead of an inevitable slowdown. And unlike last year's Budget, the tax hikes being dreamed up will be more broad-based and disinflationary, which makes it a simpler equation for the Bank."
Steve Clayton, head of equity funds at Hargreaves Lansdown, said the BoE's comments on disinflation had "thrown something of a bone to markets.
"[It] has boosted confidence that the rate cuts the market was predicting for 2026 will be delivered, which is why we saw the prices of leading housebuilders and retailers jump on the news."
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