As widely expected, the Bank of England kept its benchmark interest rate at 4%.
Bank rate remained at 4% in September after being cut from 4.25% to 4% at the August meeting.
In September, the Monetary Policy Committee voted 7-2 to keep Bank Rate at 4%, with only Alan Taylor and Swati Dhingra urging a 25 basis point cut to 3.75%.
Last week, economists predicted a surprise cut to the base rate today.
Goldman Sachs said a weakening economy, lower inflation expectations and lower wage growth would be among the factors it believed would lead the central bank’s Monetary Policy Committee to cut borrowing costs.
Before today, Barclays and UniCredit had also predicted possible interest rate cuts.
The Office for National Statistics reported that inflation remained at 3.8% in October. While that number is still relatively high, it’s lower than economists’ consensus forecast of a 4% peak in September.
The latest data shows average wage growth in the three months to August was 4.7%, down from 4.8% in the three months to July.
The UK economy grew by 0.3% in the three months to August.
Commenting on the decision, Raphael Benggio, head of bridging at MT Finance, said: “The Monetary Policy Committee’s decision to keep interest rates at 4% was expected. While inflationary pressures appear to be stabilizing, keeping interest rates unchanged also provides some reassurance to investors and the property market as a whole.”
“While a rate cut before Christmas would be a welcome boost to the economy, the MPC is likely to wait until the autumn budget delivery before making a decision on rate cuts.”
“However, we doubt this will form the basis of their decision and suggest the biggest driver is whether inflation will fall further.”
Stay tuned for more industry reactions…
