Bank of England Holds Interest Rate at 4% Amid Dissent Before Autumn Budget

The Bank of England has opted to hold its benchmark interest rate steady at 4% following a closely split decision within its Monetary Policy Committee (MPC). The announcement comes just weeks before the Autumn Budget of the Keir Starmer government.

BoE Leaves Rates Unchanged at 4% Following Tight Vote

On November 6, 2025, the Bank of England decided to keep the key interest rate unchanged at 4%, with 5 out of 9 MPC members backing the decision. The remaining 4 policymakers favoured a 0.25% reduction, reflecting growing internal divergence as inflation remains stubbornly high among G7 nations.

Inflation Outlook and Economic Concerns

Inflation in the UK stood at 3.8% in September 2025, the highest among G7 economies. The BoE stated that it believes inflation has peaked, and a disinflationary trend is underway, aided by sluggish growth and rising slack in the job market. However, the Bank warns that any future rate cuts would be aligned with sustained progress in reducing inflation.

Governor Andrew Bailey's Stand

Governor Andrew Bailey, who joined the majority in voting to hold rates, indicated caution, emphasising the value of awaiting further economic evidence. He noted that inflation expectations are at a crucial juncture, suggesting that decisions must be made carefully and aligned with economic indicators.

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Comparative Rate Challenges

The BoE’s 4% rate remains double that of the European Central Bank, putting pressure on the UK economy as the Starmer government seeks to boost growth. The disparity makes borrowing more expensive within the UK, potentially straining households and businesses ahead of expected fiscal announcements.

Next MPC Review in December

This was the final policy decision before the Autumn Budget, with the next scheduled rate meeting on December 18, 2025. Market participants will be closely monitoring inflation reports and economic data to gauge the likelihood of a possible rate cut during the next review.

Conclusion

The Bank of England’s decision to maintain a 4% interest rate amid a tight vote reveals deepening concerns over inflation and economic recovery. With disagreements within the MPC and the upcoming Autumn Budget, the December review could mark a turning point for UK monetary policy.

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