Bank of England holds interest rates at 3.75% for fifth time

The Bank of England has held interest rates at 3.75% for the fifth consecutive time, a decision widely expected by economists. The rate, which influences mortgage costs, loan repayments and savings returns, remains at its lowest level since February 2023. The Bank cited a more muted impact from higher energy prices than initially feared, alongside a soft labour market, as reasons for leaving rates unchanged. However, it warned that inflation is likely to rise further this year as higher energy costs feed through to household bills. Bank Governor Andrew Bailey noted that the situation in the Middle East remains volatile, with oil prices averaging almost 50% higher since the conflict began, adding to uncertainty. The Bank has hinted that it could still raise rates later this year, but acknowledged that much depends on external factors beyond its control. The decision leaves homeowners and savers in a waiting game, with no immediate change to borrowing costs.