The Bank of England has held interest rates at 3.75% as widely expected by economists.
It was a narrow margin, as five out of the nine members of the Monetary Policy Committee voted in favour of keeping the base rate the same. Four members wanted to reduce it to 3.5%.
The decision today comes after the Bank of England lowered borrowing costs from 4% to 3.75% just before Christmas – the fourth time the base rate had been reduced last year.
But since then, inflation was confirmed to have ticked up again and rose to 3.4% in December, up from 3.2% in November, largely driven by higher tobacco and airfare prices. The Bank of England has a target of 2% inflation.
Andrew Bailey, the Bank of England governor, said: “We now think that inflation will fall back to around 2% by the spring. That’s good news. We need to make sure that inflation stays there, so we’ve held interest rates unchanged at 3.75% today.
“All going well, there should be scope for some further reduction in the bank rate this year.”
The base rate influences the interest rates banks and lenders charge for borrowing on mortgages and loans, as well as what they pay on savings.
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Quiz collapses into administration – 109 jobs axed
Fashion retailer Quiz has collapsed into administration with 109 jobs lost.
The redundancies are being made across its head office in Glasgow and warehouse in Lanarkshire. The Quiz website has been taken offline and shoppers are being told that online orders which have not been dispatched, will be cancelled.
Quiz is also not issuing refunds – instead, it is advising customers to contact their bank or credit card for money back. If your order cost more than £100 on credit card, then you may be able to use Section 75 of the Consumer Credit Act to get a refund.
If you paid with a debit card for any amount, or credit card for goods costing £100 or less, you may be able to use Chargeback if your purchase was made in the last 120 days.
Sky price rise for new broadband and TV customers
Some Sky broadband packages will rise by £3 a month from April. Pay TV services will also be affected, with Sky Cinema being subject to a £1 a month increase.
The price rises will impact some customers who took out a new contract from February 4 onwards. It means someone taking out a contract now, could see their price go up just two months into their deal.
Some customers will be protected for 60 days from the price rise, which means they won’t see any increase until potentially June. Sky told the Mirror that the price rise does not apply to all its products, meaning not all new customers will be affected.
‘Sustainable’ cut in inflation needed before next rate cut – Andrew Bailey
Bank of England govenor Andrew Bailey wants to see a more “sustainable” cut in inflation before interest rates are cut again. The Bank of England has a target of 2% inflation.
He said: “Inflation does dip below target in the central case but it is only a small dip. We need to see this pattern emerge and more evidence, in my view, that we will have a sustainable return to target and that is more of an issue of underlying inflation.
“Just as last year, we had what we tended to call the hump. We have to be very focused on the underlying story.”
All eyes on now on when the Bank of England will cut rates – and some think it is ‘imminent’
Bank rate cut could be “imminent” after this month’s freeze, say experts
Alice Haine, personal finance analyst at online investment platform Bestinvest by Evelyn Partners, said: “Households hoping for a seventh rate cut today are likely to be feeling disappointed after the Bank of England voted to leave the headline rate unchanged at a three-year low of 3.75%.
“The decision to hold, widely anticipated by the markets, is set against a backdrop of lingering inflationary pressures after the headline rate ticked up to 3.4% in December, though the weakening labour market – with unemployment hitting 5.1% in the three months to November – will likely be a cause for concern.
“The Monetary Policy Committee’s 5-4 vote in favour of maintaining the current position was a close call, however, with clear signals that further rate cuts are imminent.”
Martin Beck, chief economist at WPI Strategy, said: “On the basis of the current evidence, bank eate is likely to be reduced further. We think a cut will come next month.”
How interest rates have changed over time
At its highest point, the base rate reached 5.25% in August 2023 – and it remained at this level for a whole year, when it was finally cut to 5% in August 2024. It has been reduced five more times since then, to its current level of 3.75%.
At its lowest level, the base rate was at an historic low of 0.1% until December 2021.
TUC accuses Bank of England of being ‘too cautious’ after rate freeze
While the Bank of England was widely expected to hold rates, there has been pressure on it to cut them.
Paul Nowak, general secretary at trade union body TUC, said: “Working people in every corner of the country are still being hammered by the living standards crisis.
“The Bank of England has a crucial role to play in easing pressures for mortgage payers, and boosting confidence across the economy so the UK can get back to stronger and sustainable growth.
“The Bank was too cautious last year. They should go further and faster with a rapid-fire sequence of rate cuts in the months to come.”
Bank of England cuts forecast for UK economy and warns of higher unemployment
Alongside the rate vote, the Bank also updated its forecasts for the economy – and warned it will grow at a slower rate than previously thought.
The central bank downgraded its growth forecasts for 2026, from 1.2% to 0.9%, and 2027, from 1.6% to 1.5%.
It is also expecting the unemployment rate to rise to 5.3% this year, having said in November that it would peak at 5.1%
Andrew Bailey, the Bank’s governor, added: “We now think that inflation will fall back to around 2% by the spring. That’s good news.
“We need to make sure that inflation stays there, so we’ve held interest rates unchanged at 3.75% today.
“All going well, there should be scope for some further reduction in the bank rate this year.”
Bank’s vote to hold freeze was the narrowest possible margin
The Bank’s nine-member Monetary Policy Committee voted by the slimmest possible five to four in favour of keeping its base rate on hold.
The four members members voted to reduce rates by 0.25 percentage points, to 3.5%.
Minutes from the meeting said although inflation is well above the Bank’s 2% target, it is expected to fall back to around the target from April. The biggest factor, it said, was a Budget announced £150 off energy bills then.
864,000 people face new tax rules in two months
HMRC is urging 860,000 sole traders and landlords to be aware of new tax rules starting in April.
Sole traders and landlords earning more than £50,000 from self-employment and property will be required to use software that is compatible with Making Tax Digital.
Making Tax Digital is a new initative that requires people to keep digital tax records and submit returns to HMRC with recognised software.
Craig Ogilvie, HMRC Director of Making Tax Digital, said: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors.
“Thousands of volunteers have already used it successfully. “This will make it easier for sole traders and landlords to stay on top of their tax affairs and help ensure everyone pays the right amount of tax.”
Number of new cars in UK rises
The number of new cars in the UK grew by 3.4% in January.
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show 144,127 new cars were registered last month, compared with 139,345 during the same period last year.
The marks the strongest January performance since 2020, before coronavirus restrictions. Pure battery electric new cars took a market share of 20.6%, which was their lowest monthly figure since April 2025.
New petrol car registrations fell by 1.9%, while plug-in hybrids were up 47.3%.
SMMT chief executive Mike Hawes said: “Britain’s new car market is building back momentum after a challenging start to the decade.
“It is also decarbonising more rapidly than ever and, despite a January dip in EV market share, the signs point to growth by the end of the year.
“The pace of the transition, however, may be slowing and is certainly behind mandated targets.”