BoE interest rates hold shows 'positives' for economy

Announced today (Thursday 21 March), the move means interest rates remain unchanged for the fifth consecutive time with borrowing at its highest level for 16 years.

In addition, the bank’s Monetary Policy Committee (MPC) voted 8 to 1 to hold interest rates at 5.25%, with one member voting to reduce rates to 5%.

Though owner of the Unruly Pig in Bromeswell, Suffolk, Brendan Padfield, explained there were still "some positives" to be found in the decision. 

“In the short term, this means the hospitality sector will continue to face challenging times and it needs so much support. 

"But however very hard this decision for businesses, on a half full as opposed to half empty analysis, perhaps there are still some positives here.

Overdue momentum 

"The first positive is the obvious, the Bank of England remain rightly resolute in their determination to use interest rates to tackle inflation, which is critical to overall confidence and it is only through confidence in the economy that we’ll get bums back on seats in our pubs and restaurants.

"Secondly, another positive is this is the first time since September 2021 that no member of the MPC has voted for an increase in interest rates.

"That’s the best indicator in years the economy is probably moving in the right direction with some commentators expecting inflation will below the 2% target in the next quarter. The indices seem to confirm that the economy may well be gaining some much overdue momentum", he said. 

In a bid to meet its 2% inflation target, the bank stated monetary policy would “remain restrictive for sufficiently long”.

Earlier this week, the headline rate of inflation​ was estimated by the Office for National Statistics (ONS) to have fallen to 3.4% in February, the lowest level for almost two and a half years.

In addition, recent GDP figures from ONS​ showed the economy grew by 0.2% in January, following a 0.1% decline in December last year, with hospitality cited as one of the biggest contributors to the upturn.

Right direction 

Speaking at a conference following the announcement, BoE governor Andrew Bailey explained: “We're not yet at the point where we can cut interest rates, but things are moving in the right direction.”

Echoing Padfield, owner of Cheshire Cat Pubs and Bars, Tim Bird, said it was "good news" interest rates had not been increased but remained "static" for five consecutive occasions., which "had to be a positive".

"The key is that inflation needs to come down quickly. All the pubs on annual RPI increases have been really hurt by inflation linked increases in their rents, but the Government is assisting with business rate discounts at present and this has to be a positive.

"As I have said recently, if we keep moaning and whinging, it will cause untold long-term damage to our industry as we try to encourage people to seek their careers in hospitality.

"The industry is very complex those complexities have to be shown to Government so they can understand how to help the mass majority of hospitality business owners and protect the long-term future of an incredible sector full of great people.

"Once people have adjusted to the new rates, they will know what they have left to spend and will spend it with the hospitality businesses they trust, who offer exceptional value and quality. So, everyone must ensure they up their game to be the best at what they do."