Bank of England holds interest rates at 5.25%: Enterprise Nation's reaction
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Posted: Thu 2nd Nov 2023
The Bank of England has kept interest rates at 5.25% for the second time in a row.
The freeze to the cost of borrowing follows the Bank's Monetary Policy Committe (MPC) announcing in September an end to 14 consecutive rises since December 2021.
The Bank increased the base rate in an effort to tackle the UK's high inflation. The 5.25% figure is still the highest level in 15 years.
Today's decision to keeps rate on hold was voted for 6-3 by members of the MPC. It follows indications that the economy is suffering due to high interest rates with inflation at 6.7% in September, unchanged from the month before.
The MPC issued a downbeat set of economic forecasts. Although the Bank expects the next inflation figures to show it has fallen below 5%, it said it won't reach the 2% target until the end of 2025. Meanwhile GDP "is expected to be broadly flat" next year and "growth is projected to remain well below historical averages".
This means a cut to interest rates any time soon is very unlikely.
Bank of England governor Andrew Bailey said:
"Higher interest rates are working and inflation is falling.
"But we need to see inflation continuing to fall all the way to our 2% target. We've held rates unchanged this month, but we'll be watching closely to see if further rate increases are needed. It's much too early to be thinking about rate cuts."
Chancellor of the Exchequer Jeremy Hunt added:
“Inflation is falling, wages are rising and the economy is growing. The UK has been far more resilient than many expected, but the best way to deliver prosperity is through sustainable growth.
“The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state.”
Enterprise Nation's reaction to interest rates being held
Emma Jones, founder of Enterprise Nation, said:
"The Bank of England's decision to retain the current level of interest rates is a much-needed silver lining for small businesses, who are navigating a challenging economic climate.
"Rising interest rates increases borrowing costs for small businesses, restricting their ability to obtain the funding they need to grow. Higher interest rates also impacts consumer spending as individuals tighten their budgets in response.
"The Bank of England's decision indicates hope for small businesses for their future prospects, although it looks like a reduction in interest rates will not be happening any time soon. We remain hopeful and optimistic that this is the end of the upwards trend in interest rate hikes.
"In the meantime, small businesses need a stable environment to regain confidence and all the support available to navigate the upcoming challenges to thrive."
Relevant Enterprise Nation resources
Get advice in Enterprise Nation's Cost of doing business hub
How small business owners can deal with the high cost of mortgages
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