Summary

  • The Bank of England holds interest rate again at 5.25%

  • Of the nine members of the Monetary Policy Committee - which makes the decision - seven voted to hold, and two to cut

  • The governor of the Bank says it needs to "see more evidence" of falling inflation before cutting the base rate

  • But Andrew Bailey adds he is "optimistic that things are moving in the right direction"

  • High interest rates are supposed to reduce inflation by making borrowing more expensive, which reduces consumers' spending power

  • Inflation in the UK has fallen to 3.2% - but is still above the Bank's target of 2%

Live Reporting

Edited by Nadia Ragozhina

  1. Analysis

    August or September likeliest time for rate cut

    Faisal Islam
    Economics editor

    Today marks incremental progress towards a cut.

    August or September seem to be the most likely timing, but if services inflation falls sharply in the next month, June is possible.

    Elsewhere, the economy is expected to be officially confirmed as out of recession tomorrow with growth of 0.4% in the first quarter, and then 0.2% in the current quarter.

    The forecast for the economy after that has improved a little, partly because of a rise in the size of the population, and some Budget measures.

    But it remains a turnaround into a slow-growth recovery, rather than a post-recession boom.

    Energy bills are not forecast to be cut further, given the very recent uptick in global energy prices.

  2. Analysis

    We're on our way to cut - just slowly

    Faisal Islam
    Economics editor

    As the governor told me in March “we’re on our way” to a rate cut - just rather slowly.

    The Bank of England remains firmly on the path for a rate cut at some point. Unlike in the US, there is no wobble. But nor did a majority of the nine-member panel that decides rates believe that the timing today was quite right. Rates remain on a plateau.

    The Bank made a point of saying that upcoming data could make that case.

    It has clearly left open the possibility of a cut on 21 June, after two sets of figures for inflation and wages.

    If that information reassures the Bank that inflation has been tamed, then a cut is possible.

  3. Bank policymakers split on rates decision
    Breaking

    Bank of England policymakers were not unanimous in holding rates at 5.25%.

    The nine-member panel that decides rates saw seven vote for a hold, and two for a cut - so that is one more vote for an immediate cut compared with the last decision.

    The Bank faces a balancing act of trying to bring down inflation while not damaging the economy.

    Markets are only fully pricing in a cut in September, but many economists think the Bank will make a move sooner than that to cut rates.

  4. Interest rates held at 5.25% for sixth time
    Breaking

    Interest rates have been held for the sixth time in a row by the Bank of England, remaining at their highest level for 16 years.

    The widely expected decision means rates will remain at 5.25%.

    The Bank has been keeping interest rates high in a bid to curb inflation.

    While inflation - the pace at which prices rise - has been falling, the rate still remains higher than had been predicted.

    Interest rates affect mortgage, credit card and savings rates for millions of people across the UK.

  5. Rates decision due shortly

    Just to remind you, the Bank of England will announce its interest rates decision in the next few minutes, at noon BST.

    We'll also be looking to see whether members of the Bank's monetary policy committee are split in their vote on whether to hold, raise or cut rates.

    Stay with us for updates and analysis.

  6. Bank of England seems to be getting more optimistic, says economist

    We're less than five minutes away from hearing from the Bank, but an economist has told the BBC there are already some signs of growing optimism.

    James Smith, Developed Markets Economist at ING, says we might see indications this afternoon that the Bank of England could cut the rate "as soon as June or maybe more likely August".

    He adds that the inflation rate will "probably" be close to the 2% target in April and lower than that during the second quarter.

    However, inflation for services and wage growth are coming down a bit more slowly.

    "There's a bit of caution there but certainly the Bank of England does seem to be getting more optimistic," he says.

  7. What is happening to inflation?

    Inflation, the rate at which prices are rising, has been falling gradually in recent times. The latest official figures show it was 3.2% in the year to March.

    Price rises for food and energy have eased, but just because inflation has fallen, it does not mean prices overall are getting cheaper, they are just rising at a slower rate. It also still means that goods in the shops are still much more expensive than they were two years ago.

    The Bank of England uses interest rates as a tool to slow inflation, which is why it has raised them and kept them at a high level.

  8. ‘It's been scary waiting for rates to go down'

    Paul Day is among those who are set to see their mortgage rise.

    The 62-year-old from Felixstowe says his mortgage will increase by £225 a month when his five-year fixed deal expires at the end of May.

    Day, who is retired, currently pays £1,027 a month, but when his fixed rate of 1.89% ends, he will move on to his lender's standard variable rate of 7.99%.

    "It's been a scary three months waiting for interest rates to go down and I'm getting closer and closer to my deadline, which is the 31st of May, and they're not," he says.

    He is choosing to go on to a variable rate, because he doesn't want to be "stuck" on another fixed one.

    "I think things should settle down within the next six months, so it's a gamble.

    "I have got a pension to fall back on, but unfortunately when you're taking money out of your pension it never gets put back."

    Paul Day

    Paul Day is among those who are set to see their mortgage rise

  9. What are interest rates and how do they affect me?

    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.

    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

  10. Analysis

    Today is a moment for economic clarity

    Faisal Islam
    Economics editor

    Bank of England governor Andrew Bailey told me recently that ”we’re on the way” to rate cuts.

    Since then, news in the US has pushed back the expected time and extent of rate cuts in America.

    Global markets have begun to send market interest rates higher, irrespective of what central banks actually decide.

    This has led to some bumps in the mortgage market here in the UK, with a range of lenders hiking fixed rates.

    Today is a moment for some clarity.

    How concerned is the Bank of England about inflation being sticky, even as the number is expected to fall sharply in a fortnight? And just how split is the nine-member monetary policy committee?

    We will know more just after noon.

  11. Analysis

    Why is rates decision so closely watched?

    Faisal Islam
    Economics editor

    Today’s Bank of England committee meeting on interest rates is important. While the clear expectation is of another hold at 5.25%, this is one of the four occasions per year when we get the Bank’s detailed forecasts on the economy.

    It can provide an opportunity to signal a shift in view. The direction of travel will also be seen in the votes of the nine-member committee.

    In February, we saw the first single vote for a cut in four years.

    In March there were no votes for a rate rise for the first time for two and a half years, but rates were still held.

    More votes for cuts and changes in language would indicate when the rate cuts are arriving.

  12. What's the link between interest rates and inflation?

    Michael Race
    BBC Business Reporter

    The Bank of England has a target to keep inflation at 2% - but the current inflation rate, while lower than the peak of 11.1% seen in 2022, is still at 3.2%.

    The traditional response to rising inflation is to put up interest rates.

    The theory is that by making borrowing more expensive, people have less money to spend and in turn buy fewer things, reducing the demand for goods and leading to price rises to slow.

    But it’s a balancing act.

    High borrowing costs can also lead to businesses borrowing less, making them less likely to invest and create jobs. This can impact economic growth - which has been sluggish in the UK for some time.

    UK inflation rate

  13. Our reporter at the Bank - before he was locked in

    Michael Race
    Reporting from the Bank of England

    Michael Race, reporting from the Bank of England

    Good morning from the Bank of England in central London.

    I’m here to bring you the latest decision on interest rates, which are decided in this grand building behind me.

    I'm not sure when this will be published. But at 10am, I’ll be heading to the Bank’s basement down a long spiral staircase - it’s not quite Gringotts (for you Harry Potter fans), but I like to think it has that vibe.

    Along with other journalists, I’ll be locked in a room for two hours and handed a document revealing the Bank's interest rate decision and reasons behind it.

    We will also get the latest report on what the Bank thinks will happen to inflation and the UK economy in the coming months as well.

    So I’ll have two hours to digest the news - as well as some tea and biscuits - package it together, and explain what it all means shortly after midday.

  14. Interest rates - more of the same?

    Welcome to our live coverage of the Bank of England’s latest interest rate decision, which is due at 12:00 BST.

    The Bank’s rate, which influences borrowing costs for things like mortgages and loans and also savings returns, stands at 5.25%, the highest level for 16 years.

    Economists expect the Bank will leave the rate unchanged - but stay with us for all the news and analysis.

    Bank of England interest rates