The Bank of England has held interest rates at 5.25%
It's the third time in a row the Bank has decided to leave the rate - which is the highest in 15 years - unchanged
Six members of the nine-person Monetary Policy Committee - which makes the decision - voted for no change
The other three wanted an increase to 5.5%
Higher interest rates are intended to lower inflation, by reducing people's spending power
Bank governor Andrew Bailey says "we've come a long way" in bringing down inflation this year, but there is "still some way to go"
You can watch our analysis by pressing play at the top of the page
As we've just heard, the Bank of England has held interest rates and signalled there are unlikely to be cuts anytime soon.
It is the third time in a row that the UK cost of borrowing remained unchanged at 5.25% - a 15-year high.
Image source, .
Faisal Islam
Economics editor
The UK has passed for now on the “pivot” towards lower rates.
The Bank of England is not following the path marked out by its American counterparts just yet.
Yesterday, the US Federal Reserve all but ruled out further rate rises and confirmed that it would start to look at the timing of cuts. This was a clear sign, that absent further shocks, all of its anti-inflationary medicine had been dispensed.
Here that was not the case, with the Bank choosing not to change course, despite lower inflation, wages and growth numbers than expected. In the minutes of a 6-3 decision to keep rates on hold rather than raise again, there was no change to the language that rates would remain at these levels for an “extended period”.
One factor discussed by the Bank of England experts is that UK inflation remains worse than the US and euro-area.
While the main inflation rate has fallen everywhere, “core inflation [which strips out the most volatile goods] has fallen back by less in the UK” and “measures of wage inflation were also considerably higher in the UK than elsewhere”.
Markets for government borrowing are deciding for themselves, pushing down the effective interest rate on longer term loans. Some of this is now being clearly passed into the fixed rate mortgage market.
But in its decision on the base rate, the Bank, for now, is steadfastly sticking to its language that rates will stay where they are for some time.
We've just learned that the Bank of England's Monetary Policy Committee (MPC) voted 6-3 to keep rates at a 15-year high.
There was reportedly no discussion of cutting interest rates, and it's still concerned that price rises might be stickier in the UK economy than in the US or Eurozone.
The three policymakers who were in the minority wanted a further hike to 5.5% in a bid to get inflation - which measures how prices rise over time - under control.
Interest rates have been held at 5.25%. This is the third time in a row the Bank of England has opted to keep rates where they are.
The decision, which was widely expected by financial markets, means borrowing costs will remain at their highest level for 15 years.
Stay with us as we bring you reaction and analysis on what this means for your finances.
We are moments away from finding out the latest interest rate decision from the Bank of England.
The UK's official interest rate, known as the "base rate", stands at 5.25%, the highest for 15 years.
Today, it is widely expected that the Bank of England will maintain the base rate.
Stay with us for the decision, reaction and analysis by our team of experts.
Shoppers at Liverpool Christmas Market discussed spending during the festive season
With Christmas fast approaching, many of us have been out and about shopping and will sadly be noticing that the same amount of money may not buy as many presents as last year.
Shoppers at the Christmas market in Liverpool fear January and the months after will be tougher than usual, but one told the BBC: "It's tough times but at Christmas you've just got to splash out."
It can be easy to feel pressured to spend more around the holidays, but if you need to - set yourself a budget, note down what you’ve spent as you go and reach out if you need help.
Higher interest rates can affect people in different ways.
Dearbail Jordan
Business reporter, at the Bank of England
Our business reporter Dearbail Jordan has already descended into the Bank's basement. Here’s what she said before her phone was locked away:
Season’s greetings from ye olde Bank of England. I’m here for that most Christmassy of Christmas events – the last interest rate decision of the year.
So, it means I’m heading for the Bank of England’s cellar.
Nearly every month, journalists are invited to a lock-in which means we all troop downstairs into the deepest recesses of the Bank, which looks like a cross between a nuclear bunker and a 1970s school.
It even has lockers, which is where we journalists have to lock up our mobile phones.
We’re then shut in a room where we’re given the interest rate decision an hour before it is released at midday.
We can take in our laptops but WiFi is shut-off until a few seconds before the announcement goes out.
All the security means no information about the rate should leak beforehand but it also means journalists have time to read, ponder and write a story which you can read as the clock strikes 12.
On the upside, because it’s Christmas, the Bank usually springs for festive treats for us journalists to munch while we write.
Let’s see what they do this year. See you on the other side.
Image source, PA MediaAhead of the big interest rates decision at 12:00, William Beardmore-Gray, senior partner and group chair of estate agency Knight Frank, had a chat with the BBC’s Today programme about what to expect today.
“The industry is definitely expecting a stand-still in relation to interest rates and that is priced into people’s expectations for the next 12 months in terms of where they expect the market to go.”
He said over the last couple of months, there had been a “change in tone” among weary buyers.
Quote MessageThere seems to be more confidence now that the worst news is behind us [and] inflation is now down below 5%. Although house prices have fallen over the last 12 months, mortgage rates are coming down.”
With more optimism and lenders cutting some mortgage rates, he expects that we’ll start to see more people looking at buying and selling properties in the new year - all good signs for the market.
The Bank of England has a target to keep inflation at 2%, but the current rate is more than double that at 4.6%.
The traditional response to rising inflation is to put up interest rates.
This makes borrowing more expensive, and can mean some people with mortgages see their monthly payments go up.
Some saving rates also increase. When people have less money to spend, they buy fewer things, reducing the demand for goods and - in theory - slowing price rises.
Businesses also borrow less, making them less likely to create jobs, and may cut staff.
Image source, .In November, the Bank left rates unchanged for the second time in a row, saying price rises were slowing faster than expected.
And economists think the Bank will do the same today.
Kevin Peachey
Cost of living correspondent
As of today, the average rate on a two-year fixed mortgage is 5.98%, according to the financial information service Moneyfacts.
The average rate on a five-year deal is 5.58%. However, the best deals on the market are much lower than the average, but availability may depend on your circumstances.
These rates have been coming down recently, but still remain much higher than around 2.5% two years ago, when the Bank rate started to rise.
So, for anyone remortgaging now, their monthly repayment is still likely to be considerably higher.
Interest rates are currently at a 15-year high - so let’s look at what’s happened to them over that time.
Rates were last close to today’s levels in 2008 when the global financial crisis hit and UK interest rates were dramatically cut to historically low levels.
You’ll see from the chart below that they dipped even further in 2016 after the UK voted to leave the European Union and again during the Covid pandemic, taking the rate to just 0.1%.
Image source, .Rates began climbing again at the end of 2021 and accelerated the following year after Russia invaded Ukraine, which sent oil, gas and food prices higher.
When inflation is caused by factors such as global energy prices, action from the Bank of England may not be enough to slow it down.
Kevin Peachey
Cost of living correspondent
Each interest rate decision is watched closely for the impact on individuals’ budgets.
The theory is that a rise makes borrowing more expensive, and saving more lucrative.
Many people, of course, are both savers and borrowers and need to consider the balance between the two.
The run of 14 rate rises hit some people hard - particularly those on variable rate mortgages. But the knock-on affects others, such as renters.
Analysts now think rates have peaked, so all eyes are on any hints as to whether and when the Bank rate will fall.
Next summer is commentators’ best bet.
The Bank's Monetary Policy Committee (MPC) meets eight times a year to set interest rates.
Its nine members, external vote on whether to increase, reduce or hold interest rates.
At the last decision, six of them voted for no change and three voted for an interest rate hike.
Speaking to the BBC’s Today programme this morning, one former MPC member pointed out that there might therefore be some way to go before we can expect an interest rate cut.
Dr Sushil Wadhwani said that because recent figures on the economy have been weak, and wage growth has started to slow down, you might expect this time, or next time, to see a change in the voting pattern.
But he pointed out that pay growth was still running a bit higher than they might like to see before it looks like the Bank would be able to meet its 2% inflation target.
Quote MessageI think they’re still some way away from actually cutting interest rates."
Faisal Islam
Economics editor
While the Bank of England is not expected to move today, last night’s words from the US Federal Reserve have impacted borrowing markets across the world.
The American central bank indicated its inflation-fighting rate rises were done and the next move would be down, the long-awaited “pivot” in US policy.
Here, with inflation still well above target at just under 5%, the Bank of England will keep its powder dry.
While the economy remains stagnant at best, concerns over inflation remain.
After 14 rate rises over the past two years, the Bank still thinks about half the impact of that on households and businesses is yet to filter across the economy.
But already, market interest rates for government borrowing are tumbling in expectation of Bank of England rate cuts next year.
This has already started to feed through to banks and building societies, which have begun to cut back rates for fixed mortgages.
After a vote, the Bank’s nine-member committee will announce its decision at midday today.
Interest is what you pay for borrowing money and what banks pay you for saving money with them.
For example, if you had £100 in a savings account with a 4% interest rate, you’d have £104 a year later.
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.
Dharshini David
Chief economics correspondent
Fourteen rate hikes since late 2021 have hit the mark; the latest figures showed inflation has halved over the last year. So why isn’t there talk of rate cuts yet?
Well, inflation remains above the Bank of England’s target. And the governor says “the last mile” in getting it down may be hardest - the most stubborn bit remains.
Services inflation, which includes everything from phone charges to hotel stays, remains higher than the Bank is comfortable with, as is private sector wage growth.
But both are easing, moving in the right direction.
It takes a year or two before rates take full effect, so the Bank will want to be more comfortable that inflation really is heading close to target before cutting.
That is why economists reckon the first cut won’t come until the summer. But things have a tendency to change.
UK interest rates are currently 5.25%.
The Bank of England has lifted rates 14 times since December 2021 when they were just 0.1%.
The key reason is because inflation - which measures the pace at which prices are rising - soared as the post-Covid economy resumed.
Russia’s attack on Ukraine added to inflation because the war disrupted energy and food supplies.
Inflation peaked at 11.1% late last year and had been falling - but not as quickly as expected, hence all the rate rises.
More recently, however, inflation has slowed to 4.6% and the Bank has held interest rates during its last two meetings. We’re expecting them to do the same today.
Image source, .Dearbail Jordan
Business reporter
Unless something extraordinary happens (and you just never know) the Bank of England is widely expected to hold interest rates at 5.25%.
It would be the third time in a row it has opted to keep rates where they are.
Instead, everyone will be trying to decipher when the Bank might consider cutting them.
This means poring over the minutes from the Bank’s rate-setting meeting and analysing every single word for any indication of when, or if, rates may start coming down.
Translating economic-speak into normal language can be a complex business – kind of like decoding hieroglyphics only not as fun.
Although last month, Bank governor Andrew Bailey did away with all the guesswork and simply said it is "much too early to be thinking about rate cuts".
Perhaps he will be as unequivocal this time around as well.
Emily McGarvey
Live reporter
Welcome to our live coverage as we wait for the Bank of England’s latest decision on interest rates at midday.
The UK’s official interest rate, which is also known as the “base rate”, currently stands at 5.25% - that’s the highest for 15 years.
Economists widely expect the Bank to leave rates where they are.
Whatever happens, our team of experts will be here to report the decision and explain what it means for mortgages, credit cards, savings and everything else it affects.