Bank of England's decision to keep interest rates at 4% is not all doom and gloom

"Inflation, it said, had peaked at 3.8% and was expected to fall steadily back to the Bank's 2% target sometime in 2027. That is an improvement on its thinking in August (the last time it published forecasts), when inflation was expected to peak at 4%. As inflation falls, economic growth picks up from 1.5% this year to 1.8% by 2028."

"In the meantime, members of the central bank's monetary policy committee (MPC) signalled that rates could fall from 4% now to a possible 3% by 2028. That would still be well above the prolonged period of ultra-low rates that mortgage borrowers had become accustomed to in the aftermath of the 2008 financial crisis, when rates fell from 5.5% at the beginning of that year to just 0.5% in March 2009."

"The next cut in interest rates could come in December, providing some Christmas cheer for borrowers and coming sooner than financial markets had previously expected. Given the expected slide in inflation and a weakening jobs market, it might be surprising that a cut was ruled out this month and it was a close-run vote. The Bank's governor, Andrew Bailey, proved to have the decisive vote, making it five members in favour of holding rates at 4% and four in favour of a cut to 3.75%."

Inflation peaked at 3.8% and is expected to fall steadily to the Bank's 2% target sometime in 2027. Economic growth is projected to rise from 1.5% this year to 1.8% by 2028. The monetary policy committee signalled that interest rates could fall from 4% now to around 3% by 2028, but the Bank chose to hold rates at 4% this month. The next rate cut could come in December. The decision to hold was a narrow 5–4 vote with Governor Andrew Bailey casting the decisive vote. Bank officials cited concern about appearing political ahead of the chancellor's budget and noted budget tax signals.

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