Bank of England expected to hold interest rates at 5%

UK interest rates have been left unchanged at 5% by the Bank of England.

The decision comes as prices continue to rise slightly faster than the Bank’s target, with inflation remaining at 2.2% last month.

Bank boss Andrew Bailey has previously warned people not to expect a sharp fall in rates, after making a cut in August.

Experts are predicting the Bank will cut rates further in November.

On Thursday, Mr Bailey said: “We should be able to reduce rates gradually over time… but its vital that inflation stays low, so we need to be careful not to cut too fast or by too much.”

Just one member of the Bank’s nine-member rate-setting committee voted for a cut.

While the inflationary inferno of two giant global shocks – the pandemic and the war in Ukraine – have died down, some embers still crackle in the service sector.

Overall target inflation is likely to tick up over the course of the rest of the year.

The UK’s economic recovery is muted. The strong growth in the first half of the year has slowed. Consumers are still weighed down by high prices.

But rate cuts have brought back some life into the housing market, where mortgage approvals have recovered to pre-mini Budget levels, when Liz Truss’s chancellor Kwasi Kwarteng unveiled a series of unfunded tax cuts.