Interest rates live: Bank of England holds rates in boost to savers ahead of Budget

Morning all, another busy day in store with the Bank of England’s latest MPC vote the headline story.

That’s later on but we’ll bring you all the analysts’ views ahead of the vote, as well as the latest business news and everything affecting your personal finances.

OK let’s lay out the basics so you know for later on.

Who: Interest rates are the domain of the Bank of England - specifically, the Monetary Policy Committee (MPC) members. There are nine of them and they vote on rate changes.

When: Today at noon. The next one is December 18, then there’s not another until February 2026.

What: The current base rate (what we call ‘the interest rate’) is 4%. The MPC members will vote on whether to keep it the same, raise it or cut it. Usually cuts/raises will be by 0.25% (called 25 basis points) but it’s far from unheard of to be double that or other figures when necessary.

If we do see a cut today, it will be the fourth one of the year and the sixth overall in this rate-cutting cycle, which started back in August 2024.

The MPC has largely held a “once per quarter” approach to cuts, with 25 basis points knocked off each time in February, May and August so far this year.

If a fourth cut arrives - either today or in December - it will be the first time since 2008 that five rate cuts in the same year have been announced.

Here’s a view of what we’ve had so far in interest rates over the past few years, from the start of 2021 onwards.

The cost of living crisis and rapid rise of inflation across 2022 and 2023 saw interest rates rise quickly to try and stem the tide of that inflation, and though there were 14 raises in total across that period, the BoE did come in for criticism for not doing enough, or not doing it fast enough.

Rates peaked at 5.25 per cent and stayed there for a full year, before the rate-cutting cycle started in August 2024.

Five cuts later we’re down to 4 per cent, but inflation has stayed higher for longer than expected so the cuts haven’t come as quick as some would have wanted - such as businesses, homeowners and the government, as lower rates tend to see productivity upticks.

Looking at a wider lens, this shows interest rates all the way back to 2003.

It’s been a bit of a rollercoaster at times but after hitting 5.75 per cent pre global financial crisis, there was a long period of basically zero interest rates.

Not many expect a return to those days, even once inflation is tamed and if/when geopolitical situations return to more or less stability.

Inflation and interest rates are eternally linked in our economies.

They are complex topics and naturally there is way more to it, but in a nutshell:

The BoE uses interest rates to try and control inflation. Higher rates discourage businesses from investing in projects and hiring as many people, which in turn leads to less money in the economy, lower spending from people and therefore less opportunity to raise prices (which is basically what inflation is).

Therefore higher rates can help bring down inflation toward a government-set 2 per cent target. Currently we’re at 3.8 per cent inflation.

For an introductory explainer on how one impacts the other and how that affects you, with savings and mortgage repayments and the like, you can check this article out.

While those people due to renew their mortgage soon will be hoping for rate cuts which in turn prompt lenders to reduce their own interest rates, for savers it’s a different matter.

Kate Steere, money expert at the personal finance site Finder, believes a rate cut today would mean bad news for savers across the rest of the year.

“If there is a base rate cut today, the Bank of England will essentially be giving banks a carte blanche to further slash savings rates.

“Even holding the base rate at the last meeting didn’t stop providers from reducing their rates, with 9 major banks and building societies dropping rates in October and November.

“With households already facing uncertainty ahead of the Autumn Budget, a rate cut now would be a blow to savers. They’ve done the right thing by putting money away, yet they risk being punished with shrinking returns at a time when every pound counts.”

If you’re planning to set up a new business soon, you might want to incorporate it sooner rather than later.

Companies House is increasing a massive raft of fees, including incorporation costs being lifted to £100 - that’s double the current cost.

The new fees are available here and start from February 2026.

While inflation is unquestionably still an issue here, running at 3.8 per cent, the defining factors for the voters will include specific segments of inflation, how fast it is coming down (disinflation) and so on.

That’s where the split in votes come, when the MPC members see different areas as more important, recent trends as more notable (or not) and of course, what they think comes next.

“Inflation has almost certainly peaked. Food inflation – a critical concern at the Bank of England this summer – fell back in September and is now running half a percentage point below official forecasts,” explained ING UK economist James Smith.

“This all comes at a time when the Bank is visibly divided on how problematic inflation really is.”