This decision was widely expected and reflects ongoing concerns about risks of higher inflation, currently running at 3.8% for the second month running.

At today’s meeting the Monetary Policy Committee (MPC) voted by a majority of 7–2 to maintain bank rate at 4%. Two members voted for a 0.25% cut to 3.75%. 

The Committee warned it was ‘alert to the risk that this temporary increase in inflation could put additional upward pressure on the wage and price-setting process’, but expects inflation to drop to the 2% target in the ‘medium term’.

The last base rate cut was in July, and with one further meeting before the critical autumn Budget, the 6 November decision will be watched closely.