Bank of England holds base rate at 3.75% as three members push for a rise
Rates held at 3.75% on a 6-3 vote, but markets now expect a rise on 5 November. What it means for your savings and mortgage
The Bank of England has kept the base rate at 3.75%. The decision was closer than the last one: six members of the Monetary Policy Committee voted to hold, while three wanted a rise to 4%. With inflation back up to 3.1% and oil and gas prices pushed higher by the conflict in the Middle East, markets now price a quarter-point rise at the next meeting as more likely than not.
Why the vote was so close
The Bank's job is to bring inflation back to 2%. Inflation had been drifting down through the spring but has now risen for two months in a row, driven mostly by motor fuel. The three members who voted for a rise think the Bank needs to act before higher energy costs feed into other prices. The majority wanted more evidence first.
Nobody on the committee voted for a cut.
What happens to savings rates
Savings rates tend to move on expectations, not just on the decision itself. Because a November rise is now seen as likely, some providers may edge fixed-rate offers up in the coming weeks. Easy-access rates usually follow the base rate more slowly.
The best easy-access accounts are paying around 4.5% to 5% at the moment, but many of the top rates include a 12-month bonus. Check the underlying rate before you move money. Fixed-rate bonds are around 4.5% to 5.25%. Check a comparison site for today's rates.
What it means for you
Mortgage holders on a fixed deal see no change until that deal ends. If yours ends in the next six months, most lenders let you lock in a new rate now and switch to a cheaper one if rates fall before completion. Fixed rates have already edged up in September on the back of the November expectations, so waiting is a gamble either way.
Anyone on a tracker or a standard variable rate is exposed. Standard variable rates are typically above 7%, so if you have drifted onto one, moving to a new fixed or tracker deal is usually the bigger saving regardless of what happens in November.
Savers should treat the next six weeks as a window. If a rise comes on 5 November, better fixed rates may appear, but the top accounts often fill up fast.
Information only, not personal advice. Mortgages are a regulated product.