On Thursday 19 December the Monetary Policy Committee (MPC) said the figure would remain at 4.75% in a bid to meet its 2% inflation target in a “timely manner and on a lasting basis”, following its meeting ending on Wednesday 18 December.
The committee voted by a majority of 6–3 to maintain the rate while three members preferred to reduce the number by 0.25 percentage points, to 4.5%.
It comes as many hospitality firms continue to struggle with Covid loan repayments.
Pressure on businesses
UKHospitality (UKH) chief executive Kate Nicholls said: “It’s disappointing that the Bank of England has held interest rates today.
“A rate cut could have helped incentivise economic growth and relieve the pressure of high interest rates on businesses, particularly those in hospitality saddled with Covid loan repayments.”
Figures from the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) rose by 2.6% in the 12 months to November 2024, up from 2.3% in the 12 months to October, driven in part by rising fuel prices.
Though the committee said this was “slightly higher” than previous expectations, adding CPI inflation was expected to continue to rise slightly in the “near term”.
It also detailed Gross Domestic Profit (GDP) was thought to have been “weaker” towards the end of the year than projected in the November Monetary Policy Report.
Financial headroom
However, the MPC explained the labour market appeared to have “balanced”. The bank added the freeze would also help to sustain “growth and employment”.
Nicholls added: “While inflation increasing for the second consecutive month is concerning, generating economic growth has to be the priority.
“Interest rates coming down and a rethink of changes to employer NICs will both be critical components in providing hospitality businesses with the financial headroom they need to invest and grow.”
At its previous meeting ending Wednesday 6 November, the BoE reduced interest rates by 0.25%, from 5% to 4.75%, after being held at 5% August. The MPC will next meet in February 2025.
