Rate-setters at the Bank’s Monetary Policy Committee voted 8–1 to hold, with external member and long-time dove Swati Dhingra pushing for a quarter-point cut. 

Policymakers reiterated their “gradual and careful approach” in the minutes of the March decision. 

It said, “greater or longer-lasting weakness in demand relative to supply” could push down inflation and lead to further cuts. 

But a “more constrained supply relative to demand and more persistence in domestic wages and prices” would lead to tighter monetary policy. 

The cost of living is currently 3%, above the central bank’s 2% target. 

The market expects two further rate cuts this year. Money markets now indicate that a rate cut, from 4.5% to 4.25%, is only fully priced in for August. This morning, it was priced in by June. 

Rate-setters said that since their February meeting, “global trade policy uncertainty has intensified, and the United States has made a range of tariff announcements”. 

It added that although growth estimates were “slightly stronger than expected” in February, business surveys have since “suggested weakness in growth and particularly in employment intentions”. 

It added that, “domestic price and wage pressures are moderating, but remain somewhat elevated”. 

Pay data today shows that annual growth in employees’ average regular earnings, excluding bonuses, was 5.9% from November 2024 to January. 

Rate-setters have long said they want to see pay growth fall below 5%. 

The committee reiterated that it expects global energy prices to push inflation to 3.7% in the third quarter of the year before falling back. 

It adds: “House prices and mortgage lending had continued to recover in recent months.  House purchase mortgage approvals had remained broadly flat since last August at relatively robust levels.” 

L&C Mortgages associate director David Hollingworth says: “Today’s decision was widely anticipated and never likely to carry any major surprises with a hold always on the cards.  

“The Bank of England has consistently suggested that interest rates can fall further, adding to the three cuts since last summer.  

Hollingworth adds: “Consequently, fixed rates have already priced in further reductions base rate, but this is still expected to be a gradual process. Unless there is a marked shift in the Bank’s messaging, mortgage rates look set to should remain relatively stable in the near term.” 

Together chief commercial officer Ryan Etchells points out: “It’s disappointing but expected that the Bank of England has employed a wait-and-see strategy by holding rates, rather than providing a much-needed boost to UK borrowers, investors, developers and SMEs.” 

SPF Private Clients chief executive Mark Harris says: “While the Bank remains concerned about rising inflation and sees it as a threat, the oncoming headwinds would appear to be stronger.  

“The Bank must be proactive – by acting sooner rather than later and introducing further rate reductions, the money markets will shift expectations and swap rates should fall, which in turn will mean cheaper mortgage rates for borrowers.” 

John Charcol mortgage technical manager Nicholas Mendes adds: “The potential for new tariffs has unsettled markets, while the UK government’s upcoming Spring Statement could introduce further fiscal tightening, adding to the challenges facing businesses and households.   

“The Bank’s decision signals a preference to keep monetary policy steady until there is clearer evidence that inflation is easing sustainably.”   

MPC Vote:  

Eight members — Andrew Bailey, Sarah Breeden, Megan Greene, Clare Lombardelli, Catherine Mann, Huw Pill, Dave Ramsden and Alan Taylor — voted to hold.  

Swati Dhingra voted to reduce Bank rate by 0.25% to 4.25%