Bank decides not to raise interest rates

UK interest rates have been held at 5.25%, providing some relief to borrowers as the Bank of England downgraded its forecast for economic growth and said inflation could stay higher for longer.

Governor Andrew Bailey warned that it is “much too early” to think about cutting rates as the Monetary Policy Committee (MPC) voted by a six-three majority to keep the base rate at 5.25%. Three members preferred to hike rates to 5.5%.

“We’ve held rates unchanged this month, but we’ll be watching closely to see if further rate increases are needed,” Mr Bailey said.

In new economic projections produced by the MPC, the UK economy is expected to flatline next year with 0% growth over 2024, down from a 0.5% increase predicted in the August report.

The outlook for this year remains the same, with gross domestic product (GDP) expected to grow 0.5%.