The Bank of England Bank Rate has been kept at its record low of 0.25% for the ninth consecutive month by the Monetary Policy Committee (MPC) today.

With a majority vote of 7-1, the MPC claimed that inflation will remain close to trend, with it currently sitting 0.3% above the government target at 2.3%.

There was an air of caution, however, as it also stated that “there are limits to the extent to which above-target inflation can be tolerated.”

The current monetary policy was deemed appropriate by the members of the MPC but the UK’s relationship with the European Union will play a large factor in whether that opinion shifts.

In the minutes released by the MPC, it said that it “cannot prevent the necessary real adjustment” required as the UK leaves the EU.

What does this mean for my business?

In short, the lower the Bank Rate, the cheaper it will be for you to borrow money or finance your assets. The Bank of England Bank Rate is the basis that all interest rates work from. If it goes up, interest rates go up and you will pay more interest on what you’re borrowing.

However, a low Bank Rate also means that any savings that you have will not accrue as much interest as they would if the Bank Rate were to go up.

The current rate of 0.25% is the lowest it’s ever been and it’s expected to remain as such until we have a clearer idea of how much of a ‘clean’ Brexit we have.

What about inflation? 

Today (Thursday) also sees the release of the Quarterly Inflation Report from the Bank of England, and Bank of England Governor, Mark Carney, explained how the BoE will raise its forecast for inflation from 2.4% to 2.7% due to the impact of the weak sterling trading at 12% less than it was before the Brexit vote.

In the statement, the BoE says: “The slowdown appears to be concentrated in consumer-facing sectors, partly reflecting the impact of sterling’s past depreciation on household income and spending,” the Bank said in its report.

It says that consumption growth will be “slower in the near-term than previously anticipated”, but then forecasts that it will recover over the next two years as income growth picks up.

Inflation is also expected to continue to increase in the coming months, with predictions peaking at just below 3% in Q4, possibly leading a to a rise in interest rates which is why now could be a good time to speak to one of our specialists to sort any upcoming purchases or refinancing out before interest rates do go up.