The Bank of England has kept interest rates at 4% after the Monetary Policy Committee (MPC) met to discuss the base rate. Andrew Bailey, Governor of the Bank of England said: "We held interest rates at 4% today. Although we expect inflation to return to our 2% target, we're not out of the woods yet so any future cuts will need to be made gradually and carefully."
The base rate significantly impacts the cost of mortgages and loans, and influences the interest rates banks offer on savings accounts. It peaked at 5.25% in late 2023, but policymakers have reduced it to 4% in the months since as inflation dropped to more manageable levels. It's currently rising at a pace of 3.8% - far lower than the 11% highs seen during 2022's energy crisis, but still higher than the Bank's 2% target. The Bank of England typically raises interest rates when inflation is high to curb spending and slow price increases.
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