Gus Williams, CEO of Chambers Wales South East, South West and Mid, said: 

“Today’s 5-4 decision to hold interest rates at 4% was a close call, but ultimately the Bank of England decided against making a move.

“More interesting was Governor Bailey’s press conference, which was a ‘shrug of the shoulders’ admission that no one is really sure where the economy is or where it’s heading.   Bailey sounded like he wanted to keep his powder dry in the face of potential AI, private equity and shadow banking bubbles blowing up.

“Lowering interest rates, although it might spur some increase in activity, does not really solve the underlying issues and imbalances that are driving economic stagnation across developed economies. There might be a greater risk that reducing interest rates would just exacerbate some of these imbalances.

“An unquestioning belief in the ability of monetary policy to regulate the economy over the past 30 years, especially when Bernanke was its global cheerleader, carries a lot of the blame for where we’ve ended up, so the Bank of England taking a back seat for now is probably the right call. Fiscal, not monetary policy is the key issue, hence all eyes are on the upcoming budget.”

 David Bharier, Head of Research at the British Chambers of Commerce said:

“With the Budget just weeks away, inflation well above target, and a continued uncertain economic backdrop – today’s rate hold at 4% was unsurprising. The decision was anticipated by the BCC’s latest forecast, which also expects no further cuts in 2025, and only gradual reductions through 2026.

“With headline inflation at 3.8% in September, firms are increasingly sounding the alarm about rising costs. The Bank references BCC data throughout today’s monetary report. In our latest survey of 4,600 firms across the UK, 57% reported concern about inflation – while 72% raised labour costs as a source of pressure to raise prices. For many, this is driven by rising taxation, and the expectation of more to come.

“Ahead of the Budget, the BCC’s message to the Chancellor is clear: no more tax rises on business. With interest rates only gradually coming down, Government must urgently focus on growth through boosting exports, tackling the skills crisis, and accelerating infrastructure project delivery.  November 26th will be make-or-break for business investment and confidence.”