The Bank of England has today decided to keep the base rate of interest at 4.75 percent, after dropping it to 4.75 percent at their last meeting (a cut of 0.25%).
The move to hold was majority favoured in the committee as they voted 6 to 3 to hold fire on any more cuts.
Rising inflation and salary growth is to blame for the decision by members voting hold. Wages are currently rising at double the rate of prices, at 5.2 percent. CPI figures for Novermber showed an increase for the second month in a row - from 1.7 percent back in September to 2.6 percent in November - notably over the Bank of England's target inflation rate of 2 percent.
The OBR had previously forecast inflation to hover around two percent for the next five years.
The three members of the MPC (Monetary Policy Committee) who voted against the rate hold would have favoured a further 0.25% cut to the base rate from 4.75% to 4.5%. They cited the inflation rises being seen are temporary and forecast the opposite to occur over the near term.
After the rate decision the Pound slipped slightly against the Dollar and Euro. The 10-year government bond yield also had a minor reduction.
Savers and those on tracker mortgages can breathe a sigh of relief as no changes will occur - those on fixed deals are protected as usual, unless they are coming to the end of their deal. If their mortgage deal was fixed years ago it is likely the product rate would be very low - around 2 percent - and the average fix now is around 5 percent. The only silver lining here is that rates now are better than they were at the start of 2024.