The Bank’s Monetary Policy Committee (MPC) voted 6-3 in favour of holding the bank rate where it is, after previously cutting from 4.5 per cent in May.
It comes a day after inflation was announced as remaining at 3.4 per cent in May.
The Bank of England expects inflation to rise later this year.
“While businesses come to terms with higher labour costs that may drive some of that inflationary pressure, Donald Trump’s tariffs along with escalating tensions in the Middle East are further causes for concern on the economic outlook.”
Meanwhile, Raj Badiani, of S&P Global Market Intelligence, said he expects a rise rise to 3.7 per cent in June.
“Oil and natural gas price gains last Friday, if sustained, would add 6 basis points to our average CPI inflation forecast between May 2025 and April 2026. The peak would nudge up to 3.7 per cent in September, from 3.6 per cent.”
Will interest rates be cut again this year?
Those on variable-rate mortgages will not see a change to their repayments as a result of the hold.
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Instead, you will notice a change when your mortgage comes up for renewal.
“Inflation is easing, the labour market is cooling, and growth has slowed, but uncertainty around global risks and sticky services inflation means the rate path is still anything but settled.
The average rate on a two-year fixed mortgage is 5.11 per cent while, for a five-year fix it stands at 5.1 per cent, according to Moneyfacts.
How will the interest rate hold affect renters?
Rents are set by a variety of factors, including supply and demand, and so the hold is likely to have a minimal effect.
What will happen to savings rates?
However if you have a fixed-rate account, the interest rate is set for the period of time the account is fixed for, so it will be unaffected by the news from the Bank of England.
The best easy access savings rate on the market at the moment is Trading212’s cash ISA with a rate of 4.86 per cent.
The best one year fixed rate is with Cynergy Bank with a rate of 4.5 per cent.
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