Interest rates hold is a blow to Reeves - but all's not lost

Of all the losers from the Bank of England's decision to hold interest rates - which includes the 591,000 people currently on tracker mortgages, as well as those among the 7.1 million households on fixed rate mortgages who are scouting around for a new deal - the biggest loser of all could be one Rachel Reeves.

- JAMES MOORE

The chancellor needs the British economy to start firing. No 11 very has little headroom if it is to keep to Reeves's fiscal rules, which prohibit borrowing to fund day-to-day government spending, and avoid a tax-raising Budget in the autumn.

Base rates at the current 4.25 per cent - described by the Bank as "restrictive" - are throttling the growth that could ease the pressure, and provide some much-needed assistance to businesses struggling under the weight of high financing costs, not to mention mortgage holders grappling with high costs.

Three members of the rate-setting Monetary Policy Committee were sufficiently worried about the economy - and the prospect of inflation dipping below the Bank's 2 per cent target next year - to vote for an immediate cut.

True, they were the usual suspects - dove-in-chief Swati Dhingra, an external MPC member, Alan Taylor, also an external member and the first Reeves appointment, and Dave Ramsden, one of the Bank's deputy governors.

However, that all three of them combined to vote to defy market expectations and cut now, together with comments from governor Andrew Bailey after the decision was made public, has raised hopes that a cut could come in August. The City was previously betting on September as the more likely date.