The Bank of England has left rates unchanged for the second time in a row at 5.25%, their highest level for 15 years.
The Bank of England‘s governor Andrew Bailey has said there is “no room for complacency“ after he and colleagues voted to keep interest rates unchanged at 5.25 per cent.
At a press conference he said: “Inflation is falling, and we expect it to keep falling this year and next. Our increases in interest rates are working to bring inflation back to the 2% target.
“So today we have voted to maintain Bank Rate at 5.25%. Monetary policy remains restrictive.
“Let me be clear, there is absolutely no room for complacency. Inflation is still too high.
The Bank also expects the pace of price rises to fall sharply in coming months.
However, Andrew Bailey said it was “much too early to be thinking about rate cuts”.
“We will keep interest rates high enough for long enough to make sure we get inflation all the way back to the 2% target,” he said.
Inflation, which measures the pace at which prices are rising, stood at 6.7% in the year to September.
The Bank expects it to fall to 4.8% in October and drop further next year, as energy and food price rises ease.
Federation of Small Businesses (FSB) National Chair Martin McTague said:
“This will at least be a relief for small businesses that we seem to be at the end of continually rising rates. This means they can now strategise for growth, given that we’ve, hopefully, hit inflation’s peak.
“However, rates have got to start dropping soon as many businesses are reeling from the unwelcome effects of 14 consecutive base rate hikes. Our latest Small Business Index (SBI) has begun to show business confidence creep up, from -14.2points in Q2 of 2023 to -8 points in Q3. Now, in order for that figure to stabilise or even climb, targeted interventions are needed.
“Small businesses are really feeling the double impact of high borrowing costs and reluctant customers – an unwelcome mix in an era where the cost of doing business remains notably high.
“With the Autumn Statement on the horizon, businesses are holding their breath for supportive policies. Top of the agenda should be maintaining the 75 per cent business rates relief for SMEs in retail, hospitality, and leisure. It’s currently set to expire in March and losing it could be a knockout blow to sectors already on the ropes. It’s time the promised business rates overhaul actually happens.
“The Chancellor should also tackle the late payments issue head on by making clear that it’s not acceptable for large businesses to finance their working capital at the expense of small businesses. We’d also like to see the self-employed being able to deduct the cost of training from their taxable income. This could be a transformative policy in an era when entrepreneurs need to adapt constantly to new developments.”