Bank of England keeps interest rates unchanged at 5.25%

The Bank of England (BoE) has announced it has kept interest rates unchanged at 5.25%.

In 2024 the UK economy is expected to grow by 0.5% and 1% next year - slightly higher than previous predictions - the central bank's Monetary Policy Committee (MPC) added.

The decision means a longer period of higher borrowing costs, which have squeezed households since interest rates started rising at the end of 2021.

ITV News' Business and Economics Editor Joel Hills said it "leaves the door open" to an interest rate cut in June.

BoE Governor Andrew Bailey signalled as much optimism, saying: "We've had encouraging news on inflation and we think it will fall close to our 2% target in the next couple of months.

"We need to see more evidence that inflation will stay low before we can cut interest rates. I'm optimistic that things are moving in the right direction."

Between March 2009 and May 2022 the BoE held interest rates at below 1%.

But ever since, rates have been sharply rising - peaking at 5.25% in August 2023.

In three months (September - December 2022) rates jumped from 2.25% to 3.5%, following the announcement of former prime minister Liz Truss' mini-budget.

The last time rates reached 5.25% was during the 2008 financial crisis.

Governor of the Bank of England Andrew Bailey told ITV News he was optimistic about the current picture, but can't guarantee when - or how quickly - interest rates can come down.

What are interest rates?

Interest rates inform us how high the cost of borrowing is, or high the rewards are for saving.

Millions of people around the UK are affected by interest rates as they influence mortgages, credit card and savings rates.

The BoE will raise interest rates to curb high inflation, and the same is true for when inflation is low.

If you borrow from lenders (e.g. banks), the interest rate is the amount you are charged for borrowing money. It is shown as a percentage of the total amount of the loan.

In contrast, if you are a saver, the savings rate tells you how much money will be paid into your account, as a percentage of your savings.

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