Interest rates held at 4% as Bank paves way for cut in December

The Bank of England has opened the door to a December interest rate cut after signalling inflation had peaked as it kept borrowing costs unchanged before Rachel Reeves's make-orbreak budget.

- Richard Partington Heather Stewart

With less than three weeks before the chancellor's tax and spending statement, the Bank's monetary policy committee (MPC) voted by a five-to-four majority to keep borrowing costs unchanged at 4% for a second consecutive meeting.

However, City economists said the knife-edge decision and the Bank's latest predictions for a fall in inflation from the current rate of 3.8% would pave the way for Threadneedle Street to cut rates after the budget.

Holding the deciding vote, Andrew Bailey, the Bank's governor, said he wanted to "wait and see" whether inflationary pressures would continue to fade and if Reeves's budget would have an impact.

"We still think rates are on a gradual path downwards, but we need to be sure that inflation is on track to return to our 2% target before we cut them again," he said.