The Bank of England's Monetary Policy Committee has voted 7-2 to maintain Bank Rate at 4%.
Two members voted to reduce Bank Rate to 3.75%.
Rates remain at their lowest level since March 2023 following August’s vote to cut, with industry experts now unsure whether another rate cut will come before the end of the year.
CPI inflation remained static at 3.8% in August, in line with market expectations but below the Bank of England's upwardly revised and anticipated 4.0% peak.
The Bank of England expects inflation to peak at around 4% in September, before gradually falling back to its 2% target.
The MPC said it "remains alert to the risk that this temporary increase in inflation could put additional upward pressure on the wage and price-setting process".
Industry experts are now divided on when the next cut to Bank Rate will come, with some believing inflation has reached its peak and others expecting the Bank of England to maintain its 'hawkish' stance.
The Committee also voted by a majority of 7–2 to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £70 billion over the next 12 months, to a total of £488 billion.
Steve Matthews, investment director at Canada Life Asset Management, said: "Industrial action amongst doctors and transport workers, sticky inflation and a cooling labour market will certainly be giving the Bank pause for thought in continuing its current easing cycle and makes any imminent move on rates unlikely.
"Markets have already priced in one further cut by year-end, and whilst November may have offered opportunity for that, there’s a strong case that the MPC will exercise caution ahead of the Autumn Budget, which is shaping up to be a pivotal moment for fiscal policy. It would be a significant leap of faith for the Bank to move prematurely without clarity on what the Chancellor plans to deliver.
"Working on the basis of two consecutive pauses ahead of the Christmas meeting, we believe the regular quarterly approach is at an end and 4% may represent the neutral case for rates in the near term. We’re shifting away from an environment of regular movements seen in the recent hiking and cutting pattern, towards a prolonged pause before data drives the next cycle."
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, commented: “In August the MPC flagged its discomfort regarding the near-term outlook for consumer prices, a view subsequently confirmed by stronger than expected price pressures in July. While dissenting MPC doves argue that rising inflation may prove transient, the upward trajectory of price pressures creates an uncomfortable backdrop for the majority to vote for a consecutive loosening.
"Furthermore, the Bank had cause to raise its near-term consumer price inflation peak in last month’s Monetary Policy Report to 4.0% this month, making a rate cut on this occasion hard to justify. Indeed, in recent testimony before the Treasury Select Committee, Bank Governor Andrew Bailey signalled that doubt surrounding when rates might be cut again had intensified, effectively ruling out a September cut.
“The Bank’s rate-cutting is consistent with the calibrated “careful” and “gradual” approach to policy-setting now familiar in the decision’s accompanying statement. The communique is unlikely to be adjusted, particularly as earlier comments pointing to a less restrictive stance have now been removed.
“Given that data for September’s CPI won’t be available until late October, it is unlikely that any softening in prices will be apparent by the time the MPC next meets on 6th November. With the looming uncertainty created by the Autumn Budget, scheduled for 26th November, the sixth rate cut in the current cycle could still be some months away.”
Matt Smith, Rightmove’s mortgage expert, added: “A Base Rate hold today had looked fairly nailed on, especially after yesterday's news that inflation remains stuck at 3.8%. The later-than-usual Budget is very much on the horizon, and the markets are having to wait until the end of November for answers to the questions that are driving a lot of the current uncertainty. So, it’s not surprising we’ve seen market expectations for the next Base Rate cut shift from late 2025, into early 2026.
“We’ve seen average rates drift up recently, and with today’s decision unlikely to relieve the pressure lenders are feeling, we could see rates continue to rise in the coming weeks. This time last year, we saw a jump in activity as the Bank cut the Base Rate for the first time in four years. Our data shows that sales agreed are currently +3% higher than they were during this busy period, signalling that, for now, mortgage rate increases are not putting off those looking to move home.”
Frances Haque, chief economist at Santander UK, agreed: "There were no surprises in today’s MPC meeting. With the labour market stabilising, wage growth remaining at rates that are inconsistent with the inflation target and inflation expectations rising, a cut this time round was never realistically on the cards.
“The minutes suggest that the bar for further reductions in Bank Rate this year remains high. Yet the mortgage market continues to show resilience: last week brought a notable increase in overall market size, with approvals holding firm. Coupled with ONS data showing house price growth slowing and mortgage pricing staying close to recent lows, conditions this year appear to be firmly in favour of buyers.
“Overall, the housing market has demonstrated considerable resilience and, so far, has not been hit as hard as might otherwise be expected in a period of such economic uncertainty.”
Rob Clifford, chief executive of mortgage and protection network Stonebridge, said: “The Bank of England’s decision to hold rates today is proof of its increasingly cautious stance in the face of resurgent inflation. The spectre of 2022, when prices spiralled, still looms large for the Monetary Policy Committee – and it is clear it is determined not to repeat exposure to that risk, even though some regard it as remote.
“That means it could be some time before we see borrowing costs fall again. Markets now put the odds of a cut this year at just one in three, with the next quarter-point reduction not expected until spring 2026.
“That will disappoint some borrowers holding out for further cuts before switching deals. But conditions have improved significantly over the past 12 months to the great advantage of most borrowers. Mortgage rates are around 50 basis points lower than a year ago, thanks to cheaper funding and fierce lender competition. That means there are plenty of attractive options on offer to those who need to refinance before the end of the year.
“For advisers, today’s decision is another prompt to not only engage early with customers coming up to refinance but to reengage with those who may have opted to wait – after all, only 61% of eligible borrowers who could refinance in H1 did. They will all need clear guidance to weigh the different products on offer and secure the deal that best fits their circumstances.”
