Bank of England Holds at 4%
Monetary Policy Committee Maintains Bank Rate at 4% Amid Balanced Inflation Risks
06 November 2025
The Monetary Policy Committee (MPC) concluded its meeting on 5 November 2025 by voting to maintain the Bank Rate at 4%. The decision was reached by a narrow majority of 5–4. Four members voted to reduce the Bank Rate by 0.25 percentage points, which would have set the rate at 3.75%.
Current Economic Assessment
The MPC judged that CPI inflation is now deemed to have peaked. Progress on underlying disinflation continues, supported by the current restrictive stance of monetary policy. This progress is evident in the easing of both services price inflation and pay growth. Disinflation is further underpinned by subdued economic growth and a gradual building of slack in the labour market.
The rise in headline inflation observed earlier this year was primarily attributed to base effects in energy prices and specific one-off factors, such as supply disruptions in certain food components and increases in administered prices. The Committee’s central projection assumes this temporary increase will not trigger additional secondary effects on domestic inflationary pressures.
Monetary policy is being utilized to balance the risks associated with achieving the 2% inflation target sustainably. Recent data suggest that the risk from greater inflation persistence has become less pronounced, while the risk to medium-term inflation from weaker demand has become more apparent. Overall, the MPC judged that the risks are now more balanced, though members noted that more evidence is still required.
MPC Voting and Rationale
The Committee’s immediate policy decision followed discussions on the continuation of disinflation, the emergence of slack necessary to counteract remaining underlying inflation persistence, and the effect of the current policy stance.
Votes to Maintain Bank Rate (5 members)
Five members preferred to maintain the 4% Bank Rate (Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann, and Huw Pill).
• Concern over Persistence: Four members in this group placed greater weight on the risks of persistence in inflation, necessitating a more prolonged restriction of monetary policy. These members were concerned that disinflation could stall, citing potential risks from higher household inflation expectations or structural shifts in wage and price-setting behavior.
• Need for Evidence: Andrew Bailey, while noting that overall risks had moved down to become more balanced, judged there was value in waiting for further evidence before cutting the rate.
Votes to Reduce Bank Rate (4 members)
Four members preferred a 0.25 percentage point reduction (Sarah Breeden, Swati Dhingra, Dave Ramsden, and Alan Taylor).
• Focus on Downside Risks: These members considered disinflation to be better established and attached a greater weight to downside risks, particularly concerns that elevated household saving would continue to weigh on consumption (reflecting a potential structural change in behavior).
• Policy Over-Restrictiveness: For two members in this group (Swati Dhingra and Alan Taylor), the current policy was viewed as significantly over-restrictive, risking undue damage to activity and a possible inflation undershoot in the medium term. They argued for a gradual policy reduction now.
Outlook for Policy
All members agreed that the restrictiveness of monetary policy has fallen as Bank Rate has been previously reduced. The Committee determined that the extent of any further reductions in Bank Rate will depend on how the outlook for inflation evolves.
If progress on disinflation continues, the Bank Rate is likely to continue on a gradual downward path. The Committee will evaluate the accumulation of evidence over time, considering key upcoming data releases, including the Budget announcement due on 26 November.