The Bank of England has opted to keep interest rates steady at 4% following a narrow 5–4 vote, signalling that borrowing costs are expected to decline gradually in the coming months. Governor Andrew Bailey said he preferred to “wait and see” how inflation trends develop before cutting rates, despite signs that price growth has passed its peak.
This decision comes ahead of the government’s Budget on 26 November, where Chancellor Rachel Reeves faces growing speculation she could raise taxes. Reeves said the Bank’s updated outlook suggested inflation would fall faster than previously thought and pledged to make “fair choices” to strengthen the economy, reduce debt, and ease the cost of living.
Shadow chancellor Mel Stride criticised Reeves, claiming high inflation and prolonged interest rates were the result of her “reckless borrowing spree” and “Jobs Tax”, accusing Labour of trapping the country “in a doom loop”.
The Bank noted that while inflation has slowed to 3.8%, nearly twice its 2% target, consumers remain cautious and focused on value. It reported weak retail and hospitality spending, alongside rising childcare pressures and job insecurity. The unemployment rate is forecast to reach 5% by year-end and remain there for several years, as the Bank maintains a careful stance on future rate cuts.
