BoE rate decision: "another missed opportunity to address the UK’s slowing economy"

Following recent economic data, the fact that three members voted for a cut is surprising, given the MPC's voting history. Given that the next meeting is not until February, the hope of deep and plentiful rate cuts in 2025 seems to be unlikely. Mortgage holders holding off for better pricing are not going to get any early Christmas presents.

The Base Rate being held at 4.75% comes as no surprise given the news surrounding inflation this week. More surprising will be the vote of 6-3 in favour of the hold. With inflation back on this rise in recent months the fact that three committee members voted to cut the rate again will be an interesting takeaway.

This hold of the Base Rate will do little to make change in the mortgage rates currently available, the expectation of a base rate hold was almost unanimous across the financial markets, and Swap rates had priced for that decision too. Its unlikely we will see any wholesale mortgage rate cuts early in 2025, it's more about competitive pressures within the High Street and the clamber to start the year well as lenders.

With recent wage growth figures, borrowers will welcome the rate hold, and savers can be relieved there were no cuts. But is this a pause before further cuts, a step toward stagnation, or the calm before another storm of rate hikes given the wider economic picture?

The Bank of England's steadfast grip on interest rates at 4.75% feels rather like waiting for a London bus in the rain - you know relief will come eventually, but it's jolly uncomfortable in the meantime. While three brave souls on the Monetary Policy Committee pushed for a rate cut, the majority's cautious stance leaves millions of British households continuing to juggle their financial juggernauts.
With inflation playing hide and seek above the target and the economy moving slower than a queue at the Post Office during Christmas, this decision strikes a peculiarly British balance between prudence and missed opportunity. Homeowners wrestling with mortgage payments and businesses yearning for a shot of economic adrenaline will need to keep their stiff upper lips firmly in place until at least February, when the Bank's next decision might finally bring some welcome news to the nation's collectively squeezed purses.

While the Fed continues towards easing, the BoE is taking a measured walk, carefully watching each step. The MPC voting to maintain interest rates signals a decisively cautious approach as inflationary pressures persist in the UK. The recent uptick to an eight-month high has highlighted that the inflation genie isn't fully back in the bottle, as consumer price pressures refuse to dissipate. This latest vote has revealed growing cracks in the MPC's united front, as despite six members including Governor Bailey, voting to maintain the status quo, three dissenters pushed for a 25bps cut. Furthermore, with a growing trend of global easing putting pressure on the central bank, there is still a need to assess the full impact of the budget as the balancing act between taming inflation and supporting economic growth becomes increasingly delicate. For now, the BoE has demonstrated that in monetary policy, it's not always about keeping up with the Joneses – or in this case, the Powells.

Borrowers may have hoped for an early Christmas gift with a rate cut but unfortunately it was not to be. The decision was fully anticipated but what was rather surprising was three MPC members voting to cut bank rate. The Bank of England will have some tough decisions to make in the not too distant future if inflation keeps on creeping up.

This news is as disappointing as not finding a tenner in your Christmas card from Auntie Mabel—or worse, discovering an unwanted sprout on your plate. While the Bank of England’s decision to hold rates at 4.75% offers some stability, it’s a bittersweet pause for households still grappling with the cumulative impact of prior hikes. For many, it’s like a financial tightrope act—steady for now, but the balance remains precarious.