Kevin Peachey
Cost of living correspondent

The decision today, and perhaps more significantly the mood music from the Bank of England, is relevant for future mortgage rates.

There is some competition back in the market on fixed rate deals and if this is the end of a cycle of interest rate rises, then lenders may feel more confident to offer lower mortgage rates.

But the reality for homeowners is that their next deal is still likely to be significantly more expensive than the last one.

Of course, those on tracker or standard variable rates are more directly impacted by what policymakers do, and so will be relieved to see the end of a run of rises.

And tenants in the private rental sector are affected by what their landlords are facing - and so have seen rents rising at a rapid rate.

Image source, Getty Images

We're just hearing from the Labour Party who says the UK has been left worse off by "has been left worse off after 13 years of economic chaos and instability under the Conservatives".

Shadow chancellor Rachel Reeves said: “Households coming off fixed-rate mortgages will be paying an average of £220 more a month and inflation remains high because of the Conservatives’ disastrous mini-budget.

“Labour’s plan for the economy is about returning stability and boosting growth so we can cut household bills, create better-paid jobs and make working people in all parts of the country better-off.”

Faisal Islam
Economics editor

It was knife-edge decision, with Governor Andrew Bailey using his casting vote to pause the relentless series of rate rises we have seen in just under two years.

There were clear arguments to raise again, but in the end the evidence emerging yesterday of all the main measures of inflation heading down was enough for the Bank to conclude their medicine is working.

While the Bank reiterated language indicating that rates could stay at these levels for a longer period than expected, for now this looks like the start of a turning point.

The Chancellor has welcomed it as such.

At the Bank, and in the Treasury, however they will be wary of warnings of “premature celebration” from the IMF - the lesson learned by nations afflicted by the 1970s energy shock - assuming too soon that inflation was defeated.

Lora Jones
Business reporter

In the wake of the global financial crisis of 2008, UK interest rates were slashed to historically low levels.

They were subsequently cut following the UK’s vote to leave the European Union in 2016 and again during the Covid pandemic, taking the rate to just 0.1%.

But as you can see from the graph, interest rates began climbing at the end of 2021 and accelerated the following year after Russia invaded Ukraine, which sent oil, gas and food prices higher.

Today's decision marked the first time since November 2021 that the Monetary Policy Committee has met without deciding to raise interest rates.

Since then, the base rate was increased in 14 consecutive meetings, taking it from 0.1% to 5.25% as the Bank attempted to put a lid on inflation.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, says the decision was made by the Bank of England because they were concerned that "raising interest rates again could tip the economy into a recession".

"it will be a big relief for consumers and companies who have been struggling with higher borrowing costs," she told BBC News.

When asked whether it was really good news given that interest rates are still high, she added that "policy makers are of course concerned because we are getting these indicators through that plenty of companies are finding it a lot tougher and people have been struggling with the cost of living crisis".

"t isn't likely that we will see any cuts [to interest rates] soon," she adds.

Image source, Getty Images

We've just heard from the chancellor following the Bank of England leaving interest rates unchanged at 5.25%.

Jeremy Hunt said: “We are starting to see the tide turn against high inflation, but we will continue to do what we can to help households struggling with mortgage payments.

“Now is the time to see the job through. We are on track to halve inflation this year and sticking to our plan is the only way to bring interest and mortgage rates down.”

Is this the end of the rate rises? Maybe not...published at 12:15 British Summer Time 21 September 2023

12:15 BST 21 September 2023

Dharshini David
Chief economics correspondent

Over the last month, there’s been growing evidence that the rate rises are having an impact in slowing the rate of price rises by squeezing spending and activity.

It was those signs that persuaded the Bank of England’s interest setters to leave rates on hold.

Figures yesterday showed inflation has slipped instead of rising. Data last week showed a rise in unemployment and a dip in output, or GDP.

But that may not mean the rate rises are over. The decision was made by the narrowest of margins - five votes to four - and wage growth is stronger than the Bank likes.

And with the governor of the Bank of England previously hinting that interest rates aren’t likely to fall for some time - the pain for many borrowers isn’t over.

Those looking to refix mortgage deals over the next year - over 1.6 million people - are likely to face far bigger repayments then they had in the past.

Daniel Thomas
Business reporter, BBC News

The latest move to hold rates raises the prospect that a cycle of increases may have peaked.

The theory behind raising rates is that it makes it more expensive for people to borrow money, so households will cut back and buy fewer things. It also might mean that firms will raise prices less quickly.

But it's a tricky balancing act as raising rates too aggressively could cause people to cut back on their household spending which could see firms struggle for survival and economic growth slow.

In the minutes from its latest meeting, the Bank’s Monetary Policy Committee - which sets rates - said that since June inflation had fallen much faster than expected to 6.7% in August.

At the same time, it said there were “increasing signs” that higher rates were starting to hurt the UK economy.

Unemployment was inching up, it said, and overall economic growth was “weaker than expected”.

For these reasons the MPC said it had kept rates on hold. But it added that rates would need to remain “sufficiently restrictive for sufficiently long” to get inflation back down to the Bank’s 2% target - which it is not expected to reach until 2025.

Further rate increases might be needed if price rises start accelerating again, it added.

Image source, Getty Images

Here's a little of what Bank of England Governor Andrew Bailey has had to say about today's decision.

“Inflation has fallen a lot in recent months, and we think it will continue to do so,” he said.

“But there is no room for complacency. We need to be sure inflation returns to normal and we continue to take the decisions necessary to do just that.”

More on the surprise move from the Bank of England, which comes just one day after an unexpected slowing in Britain's fast pace of price growth.

Its Monetary Policy Committee voted by a narrow margin of 5-4 to keep its "base rate" at 5.25%.

Four members - Jon Cunliffe, Megan Greene, Jonathan Haskel and Catherine Mann - voted to raise rates to 5.5%.

As we're just hearing, UK interest rates have been left unchanged at 5.25% by the Bank of England.

The decision comes a day after figures revealed an unexpected slowdown in UK price rises in August.

The Bank had previously raised rates 14 times in a row to tame inflation, leading to increases in mortgage payments but also higher savings rates.

However, the latest move raises the prospect that this cycle of rate increases may have peaked.

UK interest rates have been left unchanged at 5.25% by the Bank of England in a surprise move.

Not long now... it's just five minutes until 1200, when we are expecting the Bank of England's latest interest rate decision.

The UK's official interest rate, known as the "base rate", stands at 5.25%, the highest for 15 years.

Today it could go even higher - though after a surprise drop in inflation yesterday, we could also possibly see a halt to the consecutive rises we've seen over the past two years.

Stay with us for the decision, reaction and analysis by our team of experts.

Speaking ahead of the announcement of the decision today, Frances Coppola, independent banking analyst, believes the Bank of England may avoid a big rise to avoid impacting businesses and families.

She says the Bank of England "don't want to tip the economy into recession... so it's a bit of a difficult balance," she told BBC News.

Coppola went on to say that "if they do raise, I think it will be by a very small amount".

Michael Race
Business reporter, BBC News

Economists are split over whether interest rates will be raised again after figures released yesterday showed a surprise drop in the rate consumer prices are rising.

A 15th rise in a row to 5.5% from 5.25% was widely predicted previously, but now only half of investors expect a rise.

Estimates changed after inflation, which is the rate prices rise at, was revealed to have fallen unexpectedly to 6.7% in the year to August.

Investment bank Goldman Sachs said it now expected interest rates to remain unchanged on Thursday after inflation was shown to have fallen.

But other economists say because inflation is still 6.7% - much higher than the 2% the Bank of England aims for - another rate rise could be on the cards.

Interest rates are the extra money that gets charged on top of a loan.

For example, if you borrow £100 from a bank and it charges a 5% interest rate, you will pay back £105.

The Bank of England is the UK’s central bank and it is independent from the government.

It sets a “base rate” and this influences how much lenders will charge borrowers who take out a mortgage, a loan or a credit card.

So if the Bank of England puts its interest rate up, that means you'll pay more interest on borrowed money - unless you’ve borrowed it at a fixed rate.

Interest rates are often a big deal for people with mortgages, especially those who do not have loan with a fixed rate.

But it is not all bad news, as higher interest rates should mean an increase in the interest people earn on savings - though banks can be slow to pass on these rises.

Read more: How an interest rate rise affects you and your money

Lora Jones
Business reporter, BBC News

Image source, PA Media

The slight drop in inflation we saw yesterday brought some good news for the government.

But new figures this morning showed that public borrowing was higher than economists expected in August.

Borrowing - the difference between spending and what the government receives in tax - rose to £11.6bn last month, according to the Office for National Statistics.

That was £3.5bn more than a year earlier and the fourth highest August borrowing since monthly records began in 1993.

Experts had predicted public borrowing would stand at £11.1bn last month.

Chancellor Jeremy Hunt said: "These numbers show why, after helping families in the pandemic, we now need to balance the books."

However, the monthly borrowing still comes in below the £13bn that had been forecast by the government's finance watchdog, the Office for Budget Responsibility, back in March.

Read more on what that means here.

Michael Race
BBC Business Reporter

Mortgage holders with variable or tracker mortgages, or who are looking to secure new fixed-rate deals, will see their monthly payments rise.

First-time home buyers may find they are priced out of the market as lending conditions become tighter.

Charges will also increase for some loans and credit cards that don't have fixed interest charges, though it can take longer for higher interest rates to filter through.

But people with savings should benefit from higher interest rates and get better returns on their money - though banks have been accused of keeping rates too low for savers.

The rise may also be good news for those on the cusp of retirement, who might get a better annuity rate.

For the government though, the rise in interest rates will have a knock-on effect meaning it has to pay more interest on the country's debt.

Have interest rates peaked?published at 11:14 British Summer Time 21 September 2023

11:14 BST 21 September 2023

Dharshini David
Chief economics correspondent

Are we there yet?

For borrowers, the increase in interest rates may have felt endless, with 14 since the end of 2021.

Households and landlords - and consequently their tenants - have forked out billions more due to higher borrowing costs.

The Governor of the Bank of England has suggested we’re at, or very close to, the peak for interest rates, but it depends on the economic evidence the Bank weighs up - and that’s mixed.

Wage growth is stronger than the Bank would like to see but there’s been a bigger rise in unemployment than it assumed. Inflation has fallen - including yesterday's slight, but surprise, drop.

So economists are now divided over whether the Bank will pause today - or raise by 0.25 percentage points, to be on the safe side.

It’s a finely balanced decision. Whatever happens, those refixing mortgages over the coming months will face far higher repayments than they signed up to a few years ago.

Daniel Thomas
Business reporter, BBC News

Image source, Daniel Thomas

I’m in Threadneedle Street and sent this before heading into the Bank’s “lock-in” for journalists.

I expect to get sight of the Bank’s latest rate decision, and the thinking behind it, at 11:00 - and then have an hour to write up the findings before the decision is made public.

Interest rate decisions are “market moving” so it’s vital the information isn’t released before 12:00 sharp.

Members of the press won’t be able to leave for the duration of the lock-in, which is held in a room in the Bank’s basement - not even to use the toilet.

We will also have no mobile phone or wi-fi connectivity until 12:00.