Bank of England maintains interest rate at 4% by 5 votes to 4 in tight decision
The Bank of England announced this Thursday, November 6, 2025, the maintenance of the basic interest rate at 4%. The decision was taken by the Monetary Policy Committee in a tight vote of 5 votes to 4. Five members chose to keep the rate unchanged, while four defended an immediate reduction of 0.25 percentage points.
The measure took place in London, during a meeting that evaluated recent economic indicators. The committee considered that inflation has peaked, but needs more evidence to confirm a sustainable return to the 2% target. Governor Andrew Bailey highlighted his preference for waiting for additional data before making adjustments.
Inflation registered 3.8% in September, above the target, but with signs of an underlying slowdown. The decision precedes the government’s Budget on November 26, which could influence future projections.
- The rate has remained at 4% since the last cut in August.
- Four members voted to reduce it to 3.75%.
- Inflation of services and salaries shows moderation.
Split committee vote
The Monetary Policy Committee registered a clear division at the meeting. Five members, including Andrew Bailey, Megan Greene and Huw Pill, defended maintaining the fee.
They pointed out risks of persistent inflation in wages and service prices. Clare Lombardelli and Catherine Mann also supported the current stability.
The posture reflete concern about still high domestic pressures.
Members in favor of cutting
Four members defended an immediate reduction to 3.75%. Sarah Breeden reversed previous stance and noted slack accumulating in the economy.
Dave Ramsden highlighted the reduction of uncertainty in the disinflation process. Swati Dhingra and Alan Taylor have argued that current borrowing costs excessively constrain activity.
- Breeden noticed growing slack in the job market.
- Ramsden saw reduced disinflation uncertainty.
- Dhingra argued for a lower rate due to transmission delays.
- Taylor warned of the risk of inflation below the target in 2026.
Reasons for rate maintenance
The committee judged that inflation had peaked, with progress in underlying disinflation. Monetary policy remains restrictive, reflected in moderate wage growth.
Risks of persistent inflation have diminished, but weaker demand balances the outlook. More evidence is needed before further cuts.
The Bank of England emphasized a more balanced balance between upside and downside risks.
Inflation and recent indicators
CPI inflation was 3.8% in September, stableand below projections. Food prices rose 4.3%, with a slowdown.
Services inflation remained at a high level, but in moderation. Job market shows weakening, with unemployment on the rise.
The central bank projects inflation approaching 2.5% by the end of 2026.
Projections and gradual path
If disinflation continues, the rate should follow a gradual downward path. The committee will monitor slack data, labor costs and service prices.
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The November 26th budget will influence future decisions. The next meeting takes place on December 18th, with the expectation of a cut.
The central bank forecasts growth of 1.4% in 2026, above previous estimates.
Effects for borrowers and savers
Homeowners with tracker or variable mortgages keep payments unchanged. Banks adjust fixed rates based on expectations of a cut in December.
Savers face possible reductions in income. Impact varies depending on individual financial circumstances.
- Fixed mortgages fall in anticipation of cuts.
- Savings can worsen with dovish signaling.
- Market prices cut in December with greater probability.
- Libra weakened after announcement.
Political and economic reactions
Chancellor Rachel Reeves said projections show inflation falling faster. Shadow Chancellor Mel Stride criticized maintenance, citing a lack of government plan.
Analysts see the decision as a pause in the trend of cuts. Market reacted with weaker pound and bets on future reduction.
The Bank of England avoided commenting on fiscal speculation.
Specific member placement
Andrew Bailey used tie-breaking vote for maintenance. Clare Lombardelli worried about persistent inflationary pressures.
Huw Pill cited structural changes in wages generating lasting inflation. Megan Greene and Catherine Mann maintained a hawkish view.
Sarah Breeden noted accumulated slack in the economy.
Bank future guidance
Policy does not follow a pre-defined path. Committee will evaluate accumulated evidence, including Budget and October/November data.
Rate approaching neutral level makes adjustments more balanced. Monetary contribution to disinflation will become less clear.
The central bank detailed individual views for the first time.
The Bank of England has cut interest rates five times since August 2024. Maintenance reflects cautionla with inflation above the 2% target. Decision balances risks of persistence and weak demand. Next data will define the trajectory of gradual cuts.
