Brokers call the Bank of England's latest rate hold a steady move before the Autumn Budget, and say a December cut looks likely
The Bank of England has kept the base rate steady at 4 per cent, a move brokers describe as pragmatic and stabilising in the run-up to the Autumn Budget. Inflation has eased to 3.8per cent - its lowest level since early 2022 - and the narrow five-four vote to hold suggests a growing appetite for cuts within the Monetary Policy Committee.
Adrian Anderson, director of Anderson Harris, said the outcome was largely expected but revealed how finely balanced the decision has become. “The latest inflation data did strengthen the case for a cut and SWAP rates have reduced over the past few weeks but unsurprisingly the MPC have decided to hold interest rates at 4.00%. A cut in December is much more likely.”
He added that the tight vote was especially telling. “The fact that four voted for a cut and five voted to hold… is a lot closer than people probably would have predicted even a couple of weeks ago… it’s definitely looking encouraging [for] a cut in December.”
Katrina Horstead, director at Versed, agreed that the Bank is taking a cautious but transitional approach. “The decision to hold rates at 4 percent doesn’t come as a great surprise. With inflation still above target but easing, the Bank of England is maintaining a cautious stance while waiting for clearer signs that price pressures are firmly under control.”
She said the split within the committee highlighted that the first cut could be on the horizon. “The four-to-five split vote highlights that the Committee remains divided, with some members increasingly confident that inflation is on a sustainable downward path. This signals that the first rate cut may not be far away if upcoming data supports that view.”
Looking ahead, Horstead said attention will quickly turn to fiscal policy. “The next key focus will be the forthcoming Budget, where potential tax increases could act as an additional brake on the economy. Any fiscal tightening would likely give the Bank more room to ease policy later in the year - we will all wait with bated breath!”
Mark Harris, chief executive of SPF Private Clients, said a hold was expected given inflation concerns but that growing support within the MPC was encouraging.
“There was a slim chance that the Bank of England would cut interest rates this month but ongoing concerns over inflation, which remains steady at 3.8 per cent, and perhaps a bit of wait-and-see as to what impact the Budget has, meant caution prevailed.
“We are encouraged by four members voting for a reduction in base rate to 3.75 per cent and hope more of the Committee come round to their way of thinking in due course, perhaps even as soon as next month.”
He added that lenders were already responding, noting that “the ‘big six’ have been active in reducing rates in recent days in an effort to drum up business before the year-end,” with Nationwide’s two-year fix now at 3.64 per cent.
Matthew Arena, managing director of Brilliant Group, said the decision was “no surprise” and that “stability is the key.” He cautioned that the publicity around rate announcements “can have a real effect on how people feel and that negatively impacts the market,” adding that a steady backdrop is “a great time to make longer-term decisions, whether that’s property investment, moving or buying your first home.”
With inflation easing and swap rates softening, brokers said the direction of travel is clearly downwards. Markets are already pricing in a 25-basis-point cut in December, and today’s hold offers breathing space, a stable platform for brokers to plan remortgages, manage client expectations, and prepare for an easing cycle that could begin before year-end.
