Interest rates held at 5.25% again

The Bank of England has kept rates at 5.25% again, in a widely anticipated move. We look at what it means for your money - and what the Bank’s next move could be

Bank of England in the City of London
(Image credit: Getty Images)

The Bank of England has held interest rates at 5.25% for the second time in a row.

It was a widely expected move; money markets had placed a 92% chance that rates would be left unchanged.

September’s inflation figures, which revealed that inflation had stayed at 6.7%, took some pressure off the Monetary Policy Committee (MPC) ahead of its meeting.

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The MPC voted by a majority of 6–3 to maintain the base rate at 5.25%. Three members preferred to increase the rate by 0.25 percentage points, to 5.5%. 

It means rates continue to be at a 15-year high.

The notes of the MPC meeting said there were “upside risks to inflation from energy prices given events in the Middle East. Taking account of this skew, the mean projection for CPI inflation is 2.2% and 1.9% at the two and three-year horizons respectively”.

It added: “Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures."

By leaving rates unchanged while continuing to flag the possibility of further tightening to come, the Bank is indicating that it remains in “wait and see” mode. 

Governor Andrew Bailey also warned that it was "much too early to be thinking about rate cuts".

The Bank's actions follow the Fed’s decision yesterday: it held its key interest rate at 5.25%-5.5%, a 22-year high.

Homeowners will be breathing a sigh of relief that the relentless interest rate rises seem to have come to an end. The Bank of England has been hiking rates since December 2021. Two years ago, rates were just 0.1%.

Mortgage rates have soared to reflect the rising base rate, although many lenders have cut rates recently due to the base rate now being frozen. 

The average two-year mortgage rate is currently 6.3%, according to the analyst Moneyfacts. The average five-year fix is 5.87%.


Many experts believe we have now reached the top of the rate rise cycle.

The consultancy Capital Economics expects the base rate to stay on hold at 5.25% until next November. 

Paul Dales, chief UK economist at the consultancy, comments: “By leaving rates at their 15-year high of 5.25% for the second time in a row, the Bank all-but confirmed that rates have peaked." He also highlights that it was a 6-3 MPC vote compared to the 5-4 vote in September, with three rather than four MPC members preferring a rise in rates to 5.5%.

Dales adds: "We think the economy will be weaker than the Bank expects over the next six months (a mild recession may already be underway), which will sow the seeds for a sharp fall in core inflation and wage growth in late 2024 and in 2025. That’s why we expect interest rates will be cut all the way to 3% in 2025 rather than to the 4.25-4.5% implied by market pricing."

The Bank of England's November Monetary Policy Report, released at the same time as today's interest rate announcement, notes that the base rate has a "market-implied path that remains around 5.25% until Q3 2024 and then declines gradually to 4.25% by the end of 2026, a lower profile than underpinned the August projections".

Colleen McHugh, chief investment officer at the investment platform Wealthify, comments: “Although we may be at the peak of interest rates in this rate cycle, discussions about further tightening are likely to persist, given uncomfortably high services inflation. Indeed, it was made pretty clear today that interest rate levels are going to remain in place for ‘an extended period’. Gilt yields fell back marginally in relief with the pause, with sterling fairly muted.”

There is one more interest rate announcement to come this year, on 14 December.

For all the dates of next year’s MPC meetings, read Key dates for 2024: here are the dates you need to know when managing your money


First-time buyers, homeowners on variable or tracker mortgage deals, and those about to remortgage will be happy that interest rates have not been hiked today. About 2.2 million homeowners are on variable-rate mortgages.

Fixed mortgage rates have already been falling. According to Katie Brain, consumer banking expert at data firm Defaqto, the best two-year fixed rates have dropped by 0.83 percentage points over the past two months. And there are now more five-year fixed-rate deals below 5%. 

“Hopefully this means the mortgage market is starting to stabilise a bit, especially with Nationwide reporting that house prices have begun to slightly rise too,” she comments.

Those on a standard variable rate (SVRs) will still be facing sky-high mortgage costs. These are the most expensive mortgages; homeowners who do not take out a new deal at the end of their tracker or fixed mortgage automatically move onto their lender’s SVR. 

The average SVR has rocketed from 4.41% two years ago to 8.19% today, according to Moneyfacts. 

If you’re on an SVR, contact your lender or mortgage broker to discuss your options and find out if you can switch to a cheaper rate.

Homeowners taking out a new mortgage or remortgaging might be considering opting for a tracker deal now, in the hope the Bank of England cuts rates more rapidly than expected and they enjoy falling mortgage costs. 

However, Laura Suter, head of personal finance at the investment platform AJ Bell, points out: “What the past few years have taught us is the economy and its outlook can change rapidly, so tread with caution when betting a huge financial decision on current expectations.

“Tracker mortgages can be a great option if you want more flexibility, know that you might want to get out of the mortgage sooner or want to overpay by more than the usual limits. But if another interest rate hike would take you beyond your affordability limits, picking a fixed-rate deal might be better for you. Just because rates are not expected to rise further, things can change and it isn’t a cast-iron guarantee.”


Savers are enjoying the highest rates in 15 years. A handful of easy-access savings accounts are paying above 5%, while you can get more than 6% on a one-year fixed account and 8% on the best regular saver account.

However, the interest rates on some fixed-rate savings accounts have been falling recently, and some providers have even withdrawn their top deals.

So, if you spot a savings account you like the look of, you may need to act quickly to secure it.

“The news for anyone who has been waiting on the sidelines for even higher rates is: act now while stocks last,” notes Suter. 

“The same is true for those wanting to get a good easy-access account. While the rates are variable and could be cut at any time, it’s a good idea to nab the top deal now rather than holding out for a huge increase. The reality is while there may be some very small increases in savings rates, the general trend is going to be for a plateau and then fall.”

Stephen Sillars, savings and investment editor at wealth app Chip, stresses that "no action from the Bank of England doesn’t mean savers should fall victim to inertia", adding: "Interest rates on savings have risen throughout the year, so it’s important to make sure your bank hasn’t left you behind."

Ruth Emery
Contributing editor

Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.