The Bank of England has today decided to maintain interest rates at 4%.
In a widely predicted move today, the base rate of interest has remained unchanged at 4%.
Since last summer, we’ve seen the interest rate cut five times, including last month, but with August’s reduction only favoured in a 5-4 majority following an unprecedented second vote by the 9 members of the MPC, there has certainly been a dampening of expectations about further cuts this year. Certainly, most economic analysts have been predicting today’s announcement well ahead of time.
Creeping inflation has no doubt played a big role in today’s decision. The latest figures released yesterday show overall inflation at 3.8%, almost double the Bank of England’s target 2%, and taking longer than many anticipated to get it under control.
While air fares were a downward driver, petrol and diesel prices increased in the year to August. But, the main concern for households would be another rise in food prices (the fifth month in a row). According to The Office for National Statistics, food inflation climbed to 5.1% in the year to August 2025 (4.9% last month), which is the steepest increase in 18 months, driven by price rises for items like cheese, fish, butter, coffee and vegetables.
What does it mean for housing?
For the housing market, it all paints a gloomy picture. With yesterday’s inflation figures and a delayed Budget (this year it’s 26 November, much later than the usual Autumn Budget), what is traditionally the busiest time of the year for new property instructions is likely to be relatively quiet.
Many people thinking of moving click into action from 1st September. With the economic outlook knocking consumer confidence, the most likely result is homeowners staying put for now, reducing fresh property stock coming to market. With property moves always down in January and February, it’s likely going to be spring before we see the market returning to normal.
For PLG, we’ve always positioned our Property Finding team to thrive in a slow market. Over the last 13 years, we’ve emphasised building strong working relationships, not only with clients and stakeholders, but suppliers like estate agents. This ensures we still see great opportunities when the market slows down. We regularly receive calls from estate agents with ideas for properties they have just valued that might just work for our clients. These off-market opportunities often put us at the front of the queue in key property searches around the UK for our clients.
Our thoughts going forward
Weak growth and a slowing jobs market are likely to push down on inflation longer term and present a conundrum to the MPC in their consideration of interest rates to year end. There was zero monthly growth recorded in the three months to July after a sharp drop in manufacturing output (1.3%), but wage growth stayed strong despite payroll numbers falling for a 7th consecutive month.
With predictions for further interest rate cuts by year end now somewhat less bullish than earlier in the year, much will depend on the all-important inflation and job market trends to determine what happens next. Watch this space!
We will be back with our thoughts when the next announcement is made on November 6th.
PLG Consultants
18th September 2025
