Bank of England keeps interest rates at 4.25% amid persistent inflation

The Bank of England has decided to keep interest rates at 4.25% in a move anticipated by financial experts due to ongoing economic challenges.

With inflation holding at 3.4%, significantly above the target of 2%, the Monetary Policy Committee (MPC) opted for caution, despite earlier hints of potential rate cuts following a reduction in May.

Analysts now suggest further reductions may not occur until later this year.

The UK economy’s slow growth continues to pressure policymakers to stimulate investment, but global uncertainties and persistent price pressures have delayed action.

Reaction from the property sector

Steve Cox, the chief commercial officer at Fleet Mortgages, said: “Today’s decision by the Bank of England to hold Bank Base Rate (BBR) was widely expected, particularly in light of global uncertainties and the need for continued reassurance inflation is sustainably on its way back to target.”

He highlighted that falling swap rates, rather than base rate changes, are driving mortgage product pricing, adding: “For advisers and their landlord clients, this means opportunity is already here.”

Nick Leeming, the chairman of Jackson-Stops, said: “Holding rates today reflects the air of uncertainty that has entered the UK economy.”

He points to resilience in the property market, with increased listings in May, and added: “High volumes of buyers and sellers are willing to press on and take their next step irrespective of wider economic headwinds.”

Jeremy Leaf, a north London estate agent, said: “The inevitability of the no change decision will have a limited impact on an already fairly subdued housing market as it has been largely factored in by buyers and sellers.”

He says relaxed lender stress testing is a boost for first-time buyers.

Nathan Emerson, the chief executive of Propertymark, expressed optimism about market stability, saying: “It remains positive to witness overall stability.

“This is especially prevalent when you consider the vast turbulence we have seen across the wider global economy.”

Alpa Bhakta, the chief executive of Butterfield Mortgages, acknowledged investor disappointment and said: “Even if UK inflation runs above the 2% target, there remains a real possibility that we’ll see the base fall later this year.”

Paresh Raja, the chief executive of Market Financial Solutions, said: “Lenders cannot afford to dwell on decisions from Threadneedle Street, and should focus on what they can control.”

The chief executive Chetwood Bank, Paul Noble, criticised the MPC’s caution, saying: “Holding their ground may make sense given chaotic global pressures, but it’s not the decisive leadership our economy needs.”

Matt Thompson of Chestertons said: “Some buyers paused their property search in the hope for another interest rate cut – but there are still sub-4% options available which will encourage some house hunters to resume their search.”