The Bank of England (BoE) has chosen to keep interest rates at 4% in its final base rate decision ahead of the Budget.

The move marks the second time running that the central bank has maintained rates at their current level, having been on a cutting cycle since August last year when it started to bring the base rate down from 5.25%.

At its meeting this week, the nine members on the BoE’s Monetary Policy Committee (MPC) voted by a majority of five to four to maintain the base rate at 4%. Four members were in favour of a 0.25% cut, which would have taken rates to 3.75%.

The decision to keep rates at 4% follows the announcement comes ahead of Chancellor Rachel Reeves’ Budget on Wednesday 26 November, which is expected to include a raft of tax changes.

It also follows the announcement by the Office for National Statistics (ONS) last month that CPI inflation had remained unchanged at 3.8% in the year to September.

In its report published today, the MPC said that CPI inflation is now “judged to have peaked”.

“Progress on underlying disinflation continues, supported by the still restrictive stance of monetary policy,” the MPC statement said. “This is reflected in an easing of pay growth and services price inflation. Underlying disinflation is being underpinned by subdued economic growth and building slack in the labour market.”

Deputy CEO at Mortgage Advice Bureau, Ben Thompson, commented: “This decision breaks the streak of quarterly rate cuts, and with the Autumn Budget fast approaching and meaningful tax rises likely to be imminent, the bank is clearly waiting for certainty on the inflationary outlook before making any further moves. Homebuyers and movers should therefore anticipate a stable rate environment for the time being.”

Thompson also suggested that while the headline rate may feel elevated, the “reality on the ground is much more encouraging”.

“Three years of economic adjustment have delivered a much brighter picture: house price growth has flattened, wage growth in real terms is on the rise, and borrowing power is significantly better than it was 12 to 24 months ago,” he said. “With lenders offering a wealth of innovative products, there are countless opportunities for prospective buyers to secure a competitive deal.”

Chief finance officer at Afin Bank, Charles Resnick, added: “Following the unusual approach by Chancellor Rachel Reeves to make a ‘scene setter’ speech this week ahead of the Budget, tax increases are expected in the statement on 26 November, which would break the Government’s manifesto pledges.

“What kind of tax rises and who they would impact the most is still unknown, as is any insight into other measures she will announce. As a result, economists and the markets are holding their breath, so a further base rate change in December can’t be ruled out, although it is looking more likely for next year.”

The BoE will announce one more base rate decision before the end of the year on 18 December.

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