{"id":46402,"title":"Bank of England Holds Interest Rates Signalling Possible Cut After Budget","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2025-11-07T06:00:31+00:00","modified":"2025-11-07T06:00:31+00:00","canonical_url":"https://stockmark.it/bank-of-england-holds-interest-rates-signalling-possible-cut-after-budget/","markdown_url":"https://stockmark.it/bank-of-england-holds-interest-rates-signalling-possible-cut-after-budget.md","json_url":"https://stockmark.it/bank-of-england-holds-interest-rates-signalling-possible-cut-after-budget.json","category":"Banking","categories":["Banking","Inflation","Interest rates"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/2023/07/stencil.viktorija-35.jpg?fit=1200%2C800&quality=89&ssl=1","format":"news","language":"en-GB","content":"The Bank of England has opted to hold the base interest rate at 4 per cent, following a tight vote from the Monetary Policy Committee where the decision passed by a narrow five to four margin. This move came against expectations from some City analysts who had anticipated a rate cut to stem the economic impact of pending budget tax rises. Governor Andrew Bailey indicated that the Bank could consider reducing rates after the budget, particularly if further evidence shows inflation moving towards the Bank’s two per cent target.\n\nInterest rates have been cut five times since August last year, down from a peak of 5.25 per cent. Economic activity remains subdued, constrained by speculation over impending tax rises and sustained effects from the previous budget. The Bank’s forecasts suggest GDP growth of 1.4 per cent both this year and next, with persistent uncertainty weighing on business investment and consumer spending.\n\nThe upcoming budget, set for later this month, is expected to unveil up to £40 billion in tax increases, with the possibility of an income tax rise not previously signalled in the government’s manifesto. Such fiscal tightening is anticipated to curb both inflation and GDP growth, potentially providing the Bank of England with scope to lower borrowing costs at its next meeting in December. The Chancellor, Rachel Reeves, has called on businesses and households to contribute to economic rebuilding, hinting at policy measures designed to cool inflation.\n\nDespite cooling inflation—currently standing at 3.8 per cent—and easing wage growth, the legacy of last year’s payroll tax increases and higher employer national insurance contributions continues to exert upward pressure on prices, particularly in the food sector. The Bank noted that hiring activity is being restrained, partly due to last October’s £25 billion payroll tax and the 6.7 per cent increase in the minimum wage.\n\nThe Bank’s Monetary Policy Committee published new economic forecasts, projecting inflation to fall to 3.2 per cent by March. Each member provided detailed rationales for their decisions, with Bailey signalling he would support a rate cut if disinflation becomes more established. Some committee members argue for more aggressive cuts to limit unemployment, forecast to peak above five per cent, from persisting at elevated levels.\n\nThe balance of risks outlined by the Bank of England will keep financial markets alert for signals ahead of December’s meeting, where the prospect of a rate reduction now appears firmly on the table, subject to post-budget clarity on inflation, wages, and economic growth."}