The Bank of England has announced that it will maintain the current interest rate at 5.25%, marking a departure from a series of consecutive rate increases. This decision follows recent figures that revealed an unexpected slowdown in UK price rises during August.

The Bank had previously raised interest rates 14 times consecutively in an effort to control inflation. These rate hikes led to increased mortgage payments for borrowers but also higher savings rates for savers. However, the recent decision suggests that this cycle of interest rate increases may have reached its peak.

Bank of England Governor Andrew Bailey commented on the decision, stating, “Inflation has fallen a lot in recent months, and we think it will continue to do so. But there is no room for complacency. We need to be sure inflation returns to normal, and we continue to take the decisions necessary to do just that.”

This decision signals the end of the longest successive period of tightening (an increase in the cost of borrowing) in recent Bank of England history, with the Monetary Policy Committee (MPC) having raised rates in 14 consecutive meetings. The last time the MPC voted to leave interest rates unchanged was in November 2021.

Notably, four members of the MPC, namely Jon Cunliffe, Megan Greene, Jonathan Haskel, and Catherine Mann, voted in favour of raising the cost of borrowing, hinting that future rate hikes may be on the horizon in the coming months.

In addition to the decision on interest rates, the Bank of England announced its intention to continue its program of reversing quantitative easing. This initiative involves selling government bonds and reducing the central bank’s asset pile by £100 billion over the next year, aiming to decrease the total assets to £658 billion.