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Bank of England HOLDS interest rates - Experts share what it means for you and your money

ended 19. June 2025

As markets expected, the Bank of England, “caught between sluggish growth and stubborn 3.4% inflation", left rates on hold today, at 4.25% — a decision that experts said is bad news for mortage holders but offers “some relief for savers”.

Six members voted in favour of holding while three members voted to reduce by 0.25 percentage points to 4%.

Financial services experts and business owners were divided as to whether the decision was the correct one, with one saying it was “the right call” but another accusing the Bank of England "of bottling it once again”.

John Woolfitt, Director at Atlantic Capital Markets, said: “The Bank of England leaving rates on hold is the right call for now. Threadneedle Street is balancing a contracting economy — −0.3 % GDP in April — against persistent inflation, of 3.4 % in May. The geopolitical uncertainty resulting in rising oil prices is putting upward pressure on consumer prices, complicating the inflation outlook.

"For mortgage holders, leaving rates unchanged means rates won’t improve immediately, which will continue to weigh on new applications, but this will offer some relief for savers.”

Anita Wright, Chartered Financial Planner at Bolton James, agreed: “Rising unemployment and a slowing jobs market would normally justify a rate cut. But inflation remains sticky, some of the Spring Budget measures haven’t yet been fully absorbed, and global supply-side pressures — from tariffs to commodity instability — are still unfolding.

"A rate cut now would be premature and could backfire if inflation reignites especially with geopolitical risks such as the Middle East conflict threatening further energy price shocks. The UK is caught in a classic stagflation bind: growth is weak, but inflation remains persistently above target.”

Philly Ponniah, Chartered Wealth Manager at Philly Financial, said a hold decision was always the likely outcome: “As expected, the Monetary Policy Committee held rates at 4.25%, as it was caught between sluggish growth and stubborn 3.4% inflation. The Bank’s “gradual and careful” approach continues, prioritising inflation control over immediate economic stimulus — despite the economy contracting in April."

But Prem Raja, Head of Trading Floor at Currencies 4 You, believes it was the wrong decision: "The Bank of England has opted to keep interest rates on hold once again, despite inflation remaining static and the UK labour market showing signs of weakening. While this decision may offer short-term reassurance to savers, it risks being a policy mistake.

"By delaying cuts until August or September, the Bank of England may already be behind the curve. Holding rates too high for too long could further strain businesses and households, especially borrowers, and slow economic momentum.

"Markets are beginning to price in rate cuts later this summer, but the lag in action could weigh on consumer confidence and Sterling. If economic data continues to deteriorate, the Pound may come under pressure as investors question the Bank of England's timing, flexibility and general market nous."

Raja's views were shared by Craig Fish, Director at the London-based mortgage broker, Lodestone:

"Another missed opportunity by the Bank of England. The economy’s sinking, jobs are vanishing and the Monetary Policy Committee has bottled it once again. The country’s crying out for a rate cut to jolt life back into UK plc.

"Borrowers dreaming of cheaper mortgage deals will be left disappointed because lenders aren’t about to slash rates anytime soon. And savers? Still watching inflation erode what little return they’re getting. The longer this paralysis continues, the bigger the risk of a full-blown recession. There are red alert signs everywhere but the Bank of England cannot read the room."

Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, also questioned Threadneedle Street's reading of the economy:

"The Bank of England is not known for its bold and decisive decision making, and this latest base rate hold is the latest example. The contracting economy needs an urgent boost, inflation, whilst higher than desired, was static, yet the MPC decided to be cautious again and adopt their usual "wait and see" approach. Hopefully by the time of the next decision they will have seen enough misery in the economy to make the necessary reduction. As ever, it could be too little, too late."

Kundan Bhaduri, Entrepreneur at The Kushman Group , was withering:

“The Bank of England has once again chosen the safest option by doing nothing at all. With inflation stuck at 3.4% and the economy quietly shrinking, this is not a strategy, it is the lack of one. Interest rates remain painfully high for borrowers and offer no real relief or momentum for growth. In the housing market, this move inspires nothing.

"Buyers are hesitating, developers are pausing and landlords are being slowly squeezed by higher costs and uncertainty. First-time buyers still face unaffordable deals wrapped in economic doubt. The pound may wobble as investors question whether anyone at all has a hand on the tiller. Savers may enjoy slightly better returns than a few years ago, but these gains are quickly being eaten by higher living costs. This is not bold or reassuring, this is technocratic drift dressed up as caution. We are not steering the ship, we are drifting at sea while the storm clouds gather and the compass spins.”

Meanwhile, one small business owner, Aisha Hossain, Founder at fashion retailer, Selhaya, said: "We’re already feeling the ripple effects of the struggling economy — from rising material and logistics costs to supply chain unpredictability. A stable pound might help market optics, but it doesn’t help small businesses navigating uneven economic conditions. What we need isn’t a dramatic rate cut, just a smaller one to generate a little extra positive sentiment and support meaningful growth."

14 responses from the Newspage community

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Philly Ponniah
Chartered Wealth Manager and Financial Coach at Philly Financial
As expected, the Monetary Policy Committee held rates at 4.25%, as it was caught between sluggish growth and stubborn 3.4% inflation. The Bank’s “gradual and careful” approach continues, prioritising inflation control over immediate economic stimulus — despite the economy contracting in April. While higher savings rates look attractive on paper, with inflation stubbornly above 3%, the real purchasing power gains are modest, especially for basic cash accounts. Consumers need to think beyond the surface numbers to protect their wealth effectively, particularly higher earners who are caught by tax on their savings.
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Craig Fish
Director at Lodestone Mortgages
Another missed opportunity by the Bank of England. The economy’s sinking, jobs are vanishing and the Monetary Policy Committee has bottled it once again. The country’s crying out for a rate cut to jolt life back into UK plc. Borrowers dreaming of cheaper mortgage deals will be left disappointed because lenders aren’t about to slash rates anytime soon. The Pound will likely tread water as the markets saw this coming. And savers? Still watching inflation erode what little return they’re getting. The longer this paralysis continues, the bigger the risk of a full-blown recession. There are red alert signs everywhere but the Bank of England cannot read the room.
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Ben Perks
Managing Director at Orchard Financial Advisers
The Monetary Policy Committee was always going to hold today. They love to ‘wait and see’. The data-obsessed nature of their decisions, which turns a blind eye to the pain in the real-world economy, is starting to alienate people and businesses alike. How they can conclude there is no need to reduce the base rate is beyond me. Borrowers are working their guts out, struggling to stay afloat and many are taking on even more debt just to get by. They need help, they need certainty and neither the government nor the Bank of England are providing it. Who cares where the percentage point is on inflation data when there is a single mother fighting tooth and nail to keep food on the table and a roof over her kids' heads? Yes, things have improved, but slowly, and far too slowly for many, as the recent repossessions data shows. The Monetary Policy Committee doesn't seem to want to look at those figures.
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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
Rising unemployment and a slowing jobs market would normally justify a rate cut. But inflation remains sticky, some of the Spring Budget measures haven’t yet been fully absorbed, and global supply-side pressures — from tariffs to commodity instability — are still unfolding. A rate cut now would be premature and could backfire if inflation reignites especially with geopolitical risks such as the Middle East conflict threatening further energy price shocks. The UK is caught in a classic stagflation bind: growth is weak, but inflation remains persistently above target. With inflation projected to stay around 3.7% for the remainder of the year, well above the Bank of England 2% target, we’re unlikely to see much short-term disruption in equity markets either; most of this has been priced in. Savers will welcome the decision. With no cut, savings rates — while no longer climbing — are likely to remain attractive in the short term. It’s a rare window where savers aren’t the ones losing out.
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Prem Raja
Head of Trading Floor at Currencies 4 You
The Bank of England has opted to keep interest rates on hold once again, despite inflation remaining static and the UK labour market showing signs of weakening. While this decision may offer short-term reassurance to savers, it risks being a policy mistake. By delaying cuts until August or September, the Bank of England may already be behind the curve. Holding rates too high for too long could further strain businesses and households, especially borrowers, and slow economic momentum. Markets are beginning to price in rate cuts later this summer, but the lag in action could weigh on consumer confidence and Sterling. If economic data continues to deteriorate, the Pound may come under pressure as investors question the Bank of England's timing, flexibility and general market nous.
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John Woolfitt
Director at Atlantic Capital Markets
The Bank of England leaving rates on hold is the right call for now. Threadneedle Street is balancing a contracting economy — −0.3 % GDP in April — against persistent inflation, of 3.4 % in May. The geopolitical uncertainty resulting in rising oil prices is putting upward pressure on consumer prices, complicating the inflation outlook. The Bank of England have also emphasised a “gradual and careful” cut path. Markets are pricing in potential rate reductions in August and again in December on the assumption inflation cools and the growth outlook doesn’t deteriorate further. The Bank of England won’t rush and will most likely take action when inflation visibly softens, in a mild easing cycle. The hold signals that UK yields will remain higher for longer versus their ECB peers, supporting the value of the Pound. For mortgage holders, leaving rates unchanged means rates won’t improve immediately, which will continue to weigh on new applications, but this will offer some relief for savers.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Only a deep cut can help UK plc at present, similar to the one Trump is demanding from the Federal Reserve. Businesses are looking at costs through a microscope and the only thing that is likely to fall is the number of job vacancies as confidences disappears. Higher rates may be welcomed by savers but with inflation still far away from the 2% target, their real return may be a lot smaller than they think, especially those with cash. We are returning to that limbo where we appear to be frequent visitors these days.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The Bank of England is not known for its bold and decisive decision making, and this latest base rate hold is the latest example. The contracting economy needs an urgent boost, inflation, whilst higher than desired, was static, yet the MPC decided to be cautious again and adopt their usual "wait and see" approach. Hopefully by the time of the next decision they will have seen enough misery in the economy to make the necessary reduction. As ever, it could be too little, too late.
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Justin Moy
Managing Director at EHF Mortgages
In the same way that base rate increases do little in the short term for most of the population, the same applies with base rate cuts, especially with the cry for deeper and quicker action by the Bank of England. With around 90% of mortgage borrowers on fixed rate deals, only 10% will benefit immediately and those looking for a renewal will see an impact. The rest will be enthused by the announcement, but won't feel the benefit for a while. Businesses are the typical beneficiary of a base rate cut, but this needs to be balanced for currency exchange movements, as making the Dollar or Euro more expensive will just neutralise the change. Once base rate cuts do feed through to Swap pricing, we will see new borrowers more encouraged to come to the market. Most will be eyeing longer term deals to mitigate the mess of the 2020s so far.
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Tony Redondo
Founder at Cosmos Currency Exchange
The Bank of England is a follower, not a leader, so it regularly remains behind the curve. This, on the surface, may seem prudent, given that inflation is sticky at 3.4% against the 2% target rate. In reality, it just kicks the decision can down the road, intensifying the risk of the UK economy withering further on the vine when inflation is bound to get worse from global risk events totally outside of the UK’s control. The Pound is already down to April lows against the Euro, and any further escalation of military action with Iran will increase demand for the US Dollar’s safe-haven status. Buckle up.
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David Stirling
Independent Financial Adviser at Mint Wealth
Another swing and a miss from the Bank of England. While the economy flounders and jobs evaporate in the heat, Threadneedle Street has once again opted for inaction over impact and sat on their hands.
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Rob Peters
Principal at Simple Fast Mortgage
Holding rates at 5.25% is widely expected and arguably sensible given the Bank of England is still caught between sluggish economic growth and sticky inflation. But there’s no doubt pressure is building. This decision offers stability for markets, but it also prolongs the pain for borrowers. For mortgage holders on variable rates or coming to the end of a fix, the wait for relief continues. For savers, returns remain strong, but perhaps not for much longer if a cut comes in August or September.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
The Bank of England has once again chosen the safest option by doing nothing at all. With inflation stuck at 3.4% and the economy quietly shrinking, this is not a strategy, it is the lack of one. Interest rates remain painfully high for borrowers and offer no real relief or momentum for growth. In the housing market, this move inspires nothing. Buyers are hesitating, developers are pausing and landlords are being slowly squeezed by higher costs and uncertainty. First-time buyers still face unaffordable deals wrapped in economic doubt. The pound may wobble as investors question whether anyone at all has a hand on the tiller. Savers may enjoy slightly better returns than a few years ago, but these gains are quickly being eaten by higher living costs. This is not bold or reassuring, this is technocratic drift dressed up as caution. We are not steering the ship, we are drifting at sea while the storm clouds gather and the compass spins.
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Aisha Hossain
Founder at Selhaya
A base rate hold might be the safest move for now, from a pure economic standpoint, but it doesn’t give brands like ours the clarity we need to plan with confidence. We’re already feeling the ripple effects of the struggling economy — from rising material and logistics costs to supply chain unpredictability. A stable pound might help market optics, but it doesn’t help small businesses navigating uneven economic conditions. What we need isn’t a dramatic rate cut, just a smaller one to generate a little extra positive sentiment and support meaningful growth.