The Bank of England has voted to keep the base interest rate at 4%, in what was a notably close decision. Five members of the Monetary Policy Committee (MPC) voted to hold, while four voted to cut the rate to 3.75%.

With the Autumn Budget only weeks away, the decision to pause was widely expected. Recent data suggests inflation has likely passed its peak, and the Bank noted that the risk of persistent inflation has “become less pronounced.”

What This Means for Households and Businesses

For many households and business owners, this pause may feel disappointing. Mortgage costs remain high, and businesses are bracing for potential tax changes in the Budget.

Suren Thiru, Economics Director at ICAEW, commented that the decision may feel like a “tough break” for both consumers and firms. He added that the Budget now becomes a key factor in determining whether we see a rate cut in December — depending on whether tax measures push costs up or relieve inflationary pressure.

A Signal Ahead of the Budget?

Some market analysts suggest the Bank’s decision could be strategic. By holding the rate now, the Bank may be placing responsibility back onto the government to show fiscal restraint in the upcoming Budget.

Isaac Stell, Investment Manager at Wealth Club, commented that with the Chancellor indicating tax rises are likely, fiscal tightening may now take on more of the inflation-fighting burden. If the Budget does tighten spending and raise taxes, the Bank could gain enough confidence to cut rates before Christmas.

Will a Rate Cut Come in December?

The last time the base rate was cut was in July. Many economists believe the chances of the next cut are rising — but not guaranteed.

Professor Joe Nellis, Economic Adviser at MHA, noted that although inflation has held at 3.8% for three months, underlying pressures remain. The Autumn Budget will now play a critical role in shaping the path forward. The government will be under pressure to support growth without triggering another wave of inflation.

What to Expect Next

The Chancellor has already warned that the Budget will be “tough,” citing global economic challenges. For most households, the current interest rate hold is unlikely to shift mortgage rates dramatically in the short term. Meanwhile, savings rates are already edging downward from recent highs.

If inflation continues to cool faster than expected, a December rate cut remains possible — but far from certain.

Key Dates

• Autumn Budget: Wednesday 26 November at 12:30pm

• Next Bank of England Rate Decision: 18 December

Join us for our Autumn Budget Review at 8:00am on 27th November, the morning after the Chancellor’s speech. Adrian will walk through the key announcements, what they mean for you, and the practical steps to take next.

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Categories: Insights