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Other major central banks have increased rates to counteract higher prices. <\/p>\n
On Wednesday, the US Federal Reserve announced its first hike in three years while the European Central Bank has raised rates twice since June.<\/p>\n
Of the nine members on the Bank’s Monetary Policy Committee (MPC), six voted to hold rates at 3.75% while three – including the Bank’s chief economist Huw Pill – wanted to raise them to 4%.<\/p>\n
While financial markets have priced in the possibility of several rate rises next year, Bailey said the global backdrop remained “hugely unpredictable at the moment”.<\/p>\n
He said that for interest rates to come down there would need to be “an end of conflict in the Middle East… and energy prices coming really back to where they were before this conflict began”.<\/p>\n
There were some positive notes from the Bank of England.<\/p>\n
It said the UK economy had been “more resilient” than it had expected and raised its prediction for economic growth from 0.1% to 0.4% for the period between July and September.<\/p>\n
It also said that because the effect of higher energy costs had not yet spilled over into other areas of the economy, food price inflation was now predicted to be 4% by the end of the year, less than the Bank’s previous forecast of 6-7%.<\/p>\n
Given the global picture, and market expectations of a higher Bank rate, a host of major lenders have already increased the cost of new fixed-rate mortgages.<\/p>\n
The average two-year fixed residential mortgage rate is at its highest since 11 May, at 5.77%, while the average five-year is at its highest since 8 November 2023, at 5.83%, according to financial information service Moneyfacts.<\/p>\n<\/div>\n