Nadia Ragozhina
Live reporter

We're now wrapping up our coverage.

A reminder, the Bank of England announced today that interest rates would remain unchanged at 5.25%

It also released its inflation report in which it said it expected inflation to drop quickly in the next six months before rising again later this year.

If you'd like to read more about today's decision, you can find our main story here.

And if you're curious about how the inflation rate affects you, find that out here.

Today's coverage was edited by me; it was written by Lora Jones, Tara Mewawalla, Johanna Chisholm and Jacqueline Howard.

Thanks for joining us.

After today, mortgage lenders can have a bit more confidence that rate cuts may come later on this year - so they can offer more competitive deals now.

But millions of homeowners are still likely to see their monthly payments going up if their fixed-rate deal is coming to an end.

Watch this video for tips on what you can do if your mortgage payments are rising.

Raphael Sheridan
BBC Cost of living producer

Stephen Russell is managing director of Copper Rivet Distillery in Chatham, Kent, which opened a restaurant after the Covid pandemic.

In January he told the BBC that while inflation was coming down, the prices weren’t. Because of this, he saw his profits take a hit – even though his sales were actually going up.

“It's very tricky to plan investment, plan your business, when your cost basis is going up,” he said.

A higher base rate, he said, along with higher borrowing costs and bills, had made it hard for some customers to justify shilling out on "fun" purchases.

"They've got other things to think about, paying the gas bills, paying the electricity, paying the mortgage or rent.”

While the base rate was held on Thursday, some of the impact of previous rises has yet to filter through to consumers.

These previous interest rate hikes also meant businesses like Russell's had to cut back on investment, and Russel said he would find it "hard to sustain" further rises in other costs like his wage bill.

Looking at the impact of Brexitpublished at 14:13 Greenwich Mean Time 1 February

14:13 GMT 1 February

Faisal Islam
Economics editor

Image source, Getty Images

The Bank says its forecast that the post-Brexit deal would hit the level of UK productivity by 3.5% in the long-run is “evolving broadly as assumed”.

Investment has been hit, and there are new trade barriers. Businesses told the Bank that goods export volumes were "now lower than a year ago” following a decline in trade to the European Union (EU) that is no longer off-set by an increase elsewhere.

The Bank’s new forecast says businesses report “reduced demand due to EU trade frictions” which “may be compounded” by new barriers on imports introduced this year too.

Bank remains in watch and wait mode - for nowpublished at 14:04 Greenwich Mean Time 1 February

14:04 GMT 1 February

Dharshini David
Chief economics correspondent

Inflation has been substantially lower than the Bank of England assumed at the time of its last forecast in November. It’s now expected to drop to the target 2% in the spring due to lower energy costs.

So why is the interest rate not coming down yet?

Much of the fall in inflation has been driven by the global factors that initially pushed it up – energy and food costs (and the Bank expects prices of the latter to level off this year).

But other parts of inflation – specifically for services such as restaurant meals, haircuts or phone tariffs – have been falling more slowly than it would like to see, reflecting higher costs and resilient demand from customers. It’s why the Bank expects inflation to drift up above its target in the second half of this year.

While there’s more of an impact of the previous rate rises to filter through, it’s concerned that cutting the rate too early would boost discretionary spending and increase the risk of reigniting price rises.

As a result, the Bank remains in watch and wait mode – for now.

Today's headline news is the announcement from the Bank of England that interest rates will remain unchanged at 5.25%. Here's what else we've learned:

• There was a three-way split in the Bank's voting members on whether or not to change the rate - two voted for an increase and one voted for a cut
• It's the fourth time the Bank has decided to keep the rate as is
• Decisions are made every six weeks
• We also got the Bank's inflation report, which says it expects inflation to drop quickly in the next six months before rising again later this year
• The Bank's governor said today's outlook was "good news" and that things were moving in the right direction.

Image source, PA

Time for a stocktakepublished at 13:42 Greenwich Mean Time 1 February

13:42 GMT 1 February

Faisal Islam
Economics editor

Every year, the Bank of England’s boffins do a “stocktake” of the UK’s long-term economic health.

The findings of the most recent one? The UK is not proving very productive but things are slightly improving from the depths of the last three years of crisis.

The good news is that the energy shock may not have as much of a lingering effect as feared and the shadow of the pandemic has lifted too. The Bank is also optimistic about the impact of Artificial Intelligence on boosting the economy, perhaps more quickly than expected.

The Bank of England press conference has come to an end.

The governor, Andrew Bailey, along with his colleagues, answered many questions put to them by journalists from a variety of different publications.

We are working to bring you an update on the main lines that we've heard, and more analysis from our correspondents.

Will the UK avoid recession?published at 13:34 Greenwich Mean Time 1 February

13:34 GMT 1 February

Dearbail Jordan
Business reporter

The UK economy is not quite out of the woods when it comes to a possible recession.

A recession is typically defined as two three-month periods in a row where the economy shrinks. The Bank of England reckons growth will be flat in the final three months of 2023.

But, it is a coin toss between whether the economy will expand or contract between October and December.

And if it does shrink, that would follow a 0.1% drop between July and September, therefore meaning the UK is technically in recession.

It's far too early to call it either way just yet.

While the Bank of England continues to take questions from journalists, here's a quick round-up of what some economists have said in response to the Bank's decision and forecasts today:

• For all the good news on energy and food prices, "inflation is not beaten", says Ian Stewart, chief economist at Deloitte. He says the Bank would need to be reassured that wage pressures and core inflation is under control before making any cuts.
• Paul Dales, chief UK economist at Capital Economics, says that the Bank "pushed back" against the idea that rates would be cut soon or far. The firm still thinks a rate cut in June is possible though. Ultimately, data on economic factors will determine what happens.
• Disruption in the Red Sea as well as inflation in the services sector could "pose a potential risk to the inflation outlook", says Yael Selfin, chief economist at KPMG UK. She says that these uncertainties mean the Bank "will be wary of running the risk" of squeezing consumers too much, with the impact of previous rate hikes yet to feed through.

The panel is asked a question about the Bank’s inflation target – a forward-looking low and stable target of 2% that's designed to help people plan for their futures.

Bailey stresses that, while the overarching target is to get to 2%, the country does not need to be exactly there to shift the base rate.

“We don’t need to see inflation back at target. We need confidence it’s going there," he says.

Any sign my mortgage rate will fall?published at 13:20 Greenwich Mean Time 1 February

13:20 GMT 1 February

Kevin Peachey
Cost of living correspondent

The future direction of mortgage costs depends quite significantly on what is said, rather than what is done, on a day like today.

The governor has just been repeating a phrase about the removal of the "upside bias", which translates as concentrating on how long to keep rates where they are, rather than whether to put them up.

So, for mortgage lenders, there is still plenty of confidence of rate cuts later in the year, which means they can offer more competitive deals now.

But some brokers are already saying that, in failing to reduce the benchmark rate today, there has been a missed opportunity by the Bank to help accelerate those cuts.

Bailey has just been asked how politics might play a role in the next interest rate decision - noting that Rishi Sunak's government will have handed down a new budget by the time that rolls around.

Fiscal policy announced by the government is always taken into consideration, the governor says, giving the example that the Autumn Statement was considered in the announcement today.

He won't be led to comment on the government's approach this election year, but says "we'll take it into account when it comes".

Dearbail Jordan
Business reporter

Andrew Bailey is asked about a comment by his counterpart stateside - Jay Powell, chairman of the US Federal Reserve. Powell said last night that he didn’t think working from home boosted productivity.

But Governor Bailey pleads the fifth, claiming he couldn’t possibly give an opinion since he comes into the office every day.

He reckons more data is needed to see if people actually are more productive working from home. I’d be very interested to know…

Bailey is being pressed on whether he’ll give a hint about whether the Bank intends to hike or cut the next time we find ourselves back here, but he continues to stress that he won’t “speculate” on that.

Where we are today, he says, is that the key question the Bank will be asking itself going forward has changed from “how restrictive do we need to be” to “how long do we need to maintain this for?”

Again, he emphasises that he “won’t speculate”.

How quickly will the cut come?published at 12:57 Greenwich Mean Time 1 February

12:57 GMT 1 February

Faisal Islam
Economics editor

At the press conference the Governor Andrew Bailey has made clear that for him the key question is: “For how long should we keep rates at the current level?"

That is a signal that the cut may not come as quickly as many expect.

The fall in the headline inflation rate to the 2% target is not seen as enough.

Most of the Bank wants to see that inflation will stay at target. For now, they see a slight rebound over summer.

This may disappoint some consumers, businesses and politicians.

Dearbail Jordan
Business reporter

Governor Bailey is being asked how the Bank can justify keeping rates on hold given that inflation is now expected fall back much earlier to its 2% target and that economic growth isn’t projected to be that great.

He says that while the UK has come a long way, “we’re not there yet”.

Once inflation slows to 2%, the Bank will have to closely monitor closely what happens after that.

If it remains above target for a long period, that could mean interest rates at 5.25% for longer than some would like.

The governor concludes his statement by saying that "we have come a long way".

He is now taking questions from journalists. If you would like to watch the press conference in full, you can press Play at the top of this page.

Bailey says the Bank is monitoring for evidence that inflation pressures have eased enough to reduce rates.

As we've seen, the decision today is to hold. He says all options were discussed, and that two members voted to increase, one voted to cut and the majority, of course, voted to remain as is.

So, a key question is how long the interest rate should be kept at the current level, he says.

Bailey says evidence will continue to drive the decisions and the Bank will continue to monitor.

Image source, EPA-EFE/REX/Shutterstock

But there are always risks that can change the outlook on the economy, he warns.

"Geopolitical risks" have "sadly" intensified following events in the Middle East - he says this has so far had a limited impact on wholesale energy prices.

Bailey adds that shipping volumes have fallen "materially" on Red Sea Routes, due to the attacks on container ships by the Houthis.

Shipping costs have increased on routes from East Asia to the Mediterranean and Northern Europe, the governor says, though not to the same levels as seen during the pandemic.

These price increases have not spilled over to other routes, he says, and the impact on consumers has been limited - but that could change if "trade disruptions continue".