Neha Gohil
Live reporter

The Bank of England has held interest rates at 4.25%, meeting the expectations held by markets and experts this morning.

Following the announcement, governor Andrew Bailey hinted at cutting rates in the future - which some believe could happen as soon as August.

Bailey said rates remain "on a gradual downward path", but warned "the world is highly unpredictable" and expressed concerns over the labour market and wages. He also said the Bank is monitoring the escalating tensions in the Middle East, particularly its impact on rising oil prices and therefore on inflation - the rate of rising prices overall.

As a reminder: Interest rates tell you how much it costs to borrow money, or the reward for saving it

Interest rates have been on a slow decline since it reached a peak of 5.25% in August 2023.

A leading UK business lobbying group said they believed the pause is a "pit stop on the way down". But other experts have cautioned the decision represents a huge blow to those with high mortgage costs.

Our business reporter noted in recent years the UK has had one of the highest interest rates in the G7 but, broadly speaking, central banks in have all been moving in a downward direction.

Our cost of living correspondent reports that, although a hold in interest rates suggests very little drama for household finances, there is still plenty to consider - including its impact on mortgages.

We are ending our live coverage now, but you can stay across this story on here:

• Interest rates held at 4.25% by Bank of England
• When will interest rates go down again?

Shanaz Musafer
Business reporter

So no rate cut today, but the Bank of England has hinted that further cuts are on the way, saying rates "remain on a gradual downward path".

Although the Bank is keeping an eye on energy prices, most economists think the committee will decide to lower rates when it next meets in August.

We'll find out that decision on 7 August, when the Bank will also publish it latest Monetary Policy Report, which sets out the economic analysis and inflation projections that the committee uses to make its interest rate decisions.

Tommy Lumby
BBC business data journalist

Oil prices have risen since Israel’s military strikes on Iran last week, as traders worry the conflict could disrupt supplies of the commodity in the oil-rich region.

The Bank of England said escalating tensions in the Middle East had not been key to its decision to hold interest rates at 4.25% today.

But it did say it would “remain vigilant” about how it could affect the UK economy.

Rising oil prices do not just mean higher energy bills. They can also increase production costs for many businesses, which can pass them on to consumers.

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Tackling It Together: More tips to help you manage debt

The Bank's decision to hold interest rates at 4.25% will come as a "big blow" to "people wrestling with high mortgage bills", according to Suren Thiru, the economics director of accounting organisation ICAEW.

Thiru says the decision to "is further confirmation that the speed of interest rate cuts remains especially cautious, with policymakers wary over elevated inflation and intensifying international instability".

This sentiment is echoed by Jenny Ross, money editor of consumer champion Which?, who also acknowledges that the decision is "unsurprising in light of recent events".

"Anyone concerned about meeting their payments should speak to their lender as soon as possible - they're obliged to help," Ross adds.

Meanwhile, Carsten Jung from the Institute For Public Policy Research think tank says the Bank should have lowered rates by 0.25 percentage points today to help struggling people. He also blames "lower than expected GDP growth" on persistently high interest rates.

"The government should do more to reduce the cost of living for households right now," Jung says - adding that this includes lowering electricity prices, helping people with energy debt and regulating fees charged to consumers.

Kevin Peachey
Cost of living correspondent

Interest rate decisions do have a major impact on the cost of borrowing and the returns on savings.

But discussion around them can give us a wider read on the state of the UK economy.

This guide explains what the decisions of policymakers at the Bank of England mean for you and your finances.

The Confederation of British Industry (CBI), a leading UK business lobbying group, says today's pause on interest rates is a "pit stop on the way down".

CBI economist Alpesh Paleja says although inflation is likely to be "bumpy over the next few months" the Bank of England's monetary policy committee will "look through this".

Paleja adds there is "still entrenched concern" among the committee about the "persistence of underlying price pressures".

He says the committee will want to see evidence that factors causing domestic inflation to rise are easing.

"They will also have one eye on whether renewed conflict in the Middle East will cause an oil price shock, which would have the potential to push up inflation even further."

Thus, the CBI believes the Bank will "reduce interest rates further" but will do so "gradually". It also expects rates to be cut three more times, Paleja adds, which will bring the Bank's rate down to 3.5% by "early next year".

Shanaz Musafer
Business reporter

In recent years, the UK has had one of the highest interest rates in the G7 - the group representing the world's seven largest so-called "advanced" economies.

But broadly speaking, central banks have all been moving in the same direction - i.e. downwards, although the speed at which they've moved has differed.

Although the Bank of England held rates today, the current 4.25% is down from 5.25% this time last year.

In the eurozone, the European Central Bank has cut rates eight times since last June, halving its main rate from 4% to 2%.

In the US, the Federal Reserve cut rates three times in the latter part of 2024. However, it has held rates so far this year, citing the uncertainty generated by US tariffs. Its key lending rate's target range remains at 4.25% to 4.5%.

President Donald Trump has repeatedly criticised Fed boss Jerome Powell, calling him "stupid" and "too late" to act.

Interest rates have been in a slow decline after it reached a peak of 5.25% in August 2023.

At the start of January 2020, rates were at 0.75% before falling to 0.1% by March in response to the Covid-19 pandemic.

Although they stayed there until late-2021, the rate gradually climbed to a high of 5.25% in August 2023 alongside rapidly rising prices at the time, before being cut to 5% in August 2024.

It was cut further to 4.75% in November, 4.5% in February 2025, and 4.25% in May.

As we've been reporting, the rate has now been held at 4.25%.

Kevin Peachey
Cost of living correspondent

While a hold in interest rates suggests very little drama for household finances, there is still plenty to consider.

Lenders, for example, tend to price their products based on the expectation of future interest rate changes.

The heavy hints of further cuts – probably as soon as August - might give them some confidence to cut the interest rates on some new, fixed-rate mortgage deals and other loans.

But there is still plenty of uncertainty about the UK economy, not least owing to global upheaval.

So, as policymakers take stock of the situation, commentators say it is a pretty good time for individuals to take stock of their finances too.

Read more: When will interest rates go down again?

Dearbail Jordan
Reporting from the Bank of England

The Bank of England also says that it is "sensitive" to events in the Middle East and the effect on oil prices.

It notes that since its last meeting in May, oil prices rose by 26% while natural gas prices grew by 11%.

The Bank adds that its rate-setting committee "will remain sensitive to heightened unpredictability in the economic and geopolitical environment and will continue update its assessment of risks to the economy".

Dearbail Jordan
Reporting from the Bank of England

Businesses appear to be trimming wages for some workers to pay for the rise in employment costs that came into force in April.

Chancellor Rachel Reeves lifted National Insurance contributions from employers as well as increasing the minimum wage. The bank estimates this has raised wage bills by 10%.

In the Bank'’s survey of businesses, it says pressure has grown on firms to recover these higher costs by raising their prices but “success is mixed”.

Instead it says companies are using a range of measures to cut costs, including reducing pay rises for those workers just about the minimum wage level.

Inflation remains above the Bank of England’s target of 2% and is expected to climb to 3.5% later this year. But it is expected fall back to around 2.1% next year.

Image source, Reuters

Here's the full statement from Governor of the Bank of England Andrew Bailey:

"Interest rates remain on a gradual downward path, although we've left them on hold today.

"The world is highly unpredictable. In the UK we are seeing signs of softening in the labour market.

"We will be looking carefully at the extent to which those signs feed through to consumer price inflation."

As we just reported, the Bank of England governor has warned the "world is highly unpredictable" and underlying growth in the UK is "weak", following the decision to hold rates at 4.25%.

His remarks come amid rising concern that the conflict between Israel and Iran, a major oil producer, could send energy costs higher and drive prices up faster.

The decision to hold rates also comes alongside uneven growth in the UK, after the economy expanded strongly at the start of the year, it shrank sharply in April.

Dearbail Jordan
Reporting from the Bank of England

The Bank of England has hinted at further interest rate cuts, which could come as soon as August.

Bank of England governor Andrew Bailey has just said that “interest rates remain on a gradual downward path”, although he cautions: “The world is highly unpredictable.”

The Bank marginally lifted its expectations for the UK economy but it says that underlying growth is “weak”.

There has been evidence that the pace of wage growth – which contributes to the rate of inflation – is slowing. At the same time, UK unemployment rate has risen and businesses are holding off on recruiting or replacing staff.

Bailey says: “In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation.”

Interest rates have been held at 4.25%, in a widely expected decision by the Bank of England.

The move comes as inflation remains at 3.4%, the highest level of price rises for more than a year and well above the target rate of 2%.

The Bank is due to announce its latest decision on interest rates in a few minutes at midday.

We'll publish their decision here as soon as we have it, as well as analysis of what it means for you - so stick with us.

Dharshini David
Deputy economics editor

The Bank of England’s job is to get inflation to its 2% target, and keep it there. Recent events have underscored the dilemma it faces. Rate setters will be watching oil prices closely as events in the Middle East unfold. A sustained rise could derail expectations that inflation will fall back towards target next year.

And there are other factors that threatened to keep it above target for longer: the growth in wages and inflation in the service sector have long been a concern.

But the Bank has to weigh that against evidence of weakness in activity, with job data and surveys of businesses suggesting that April’s tax changes and other policies are weighing on that and the growth outlook, which is also clouded by US President Donald Trump’s trade policy.

So analysts expect interest rates to remain on hold for now, albeit with maybe a couple of members of the nine-strong panel voting for a cut. But they expect them to be lowered perhaps twice more this year.

Image source, Getty Images

Tommy Lumby
BBC business data journalist

The Bank of England cut interest rates to 4.25% on 8 May, bringing it another notch down from the peak in recent years of 5.25%.

But market-watchers expect the Bank’s policymakers to hold rates where they are when they announce their latest decision today.

Three key things the Bank keeps an eye on when setting rates are the pace of price rises, economic growth, and how many people are in work.

Keeping rates too high could stifle economic growth and deter firms from hiring, while dropping them too low could let prices get out of control. Or so the theory goes.

Rate-setters at the Bank will be trying to navigate elevated levels of price inflation, early signs of a shrinking economy, and a weakening jobs market. Among other things.

We’ve already heard about how the Bank's decision can affect mortgages and savings, but what else do interest rates affect?

Charges for unsecured loans and credit cards may be impacted by any change in rates too.

And higher rates have been good news for those on the cusp of retirement, as they have meant better annuity rates.

This determines how much guaranteed income you get, when you swap some or all of your pension pot for a secure income.

That's because providers typically buy government bonds, which can move in line with higher interest rates.

For the government though, higher interest rates in recent times has meant it has had to pay more interest on the country's debt.