The Bank of England has kept rates at 4%, balancing inflation risks with weak growth. Businesses and households face mixed fortunes as the wait for possible cuts later this year continues.
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Bank of England holds interest rates steady
18 Sep 2025
Meg Lyons, Shard Financial Media
Meg Lyons, Shard Financial MediaMeg Lyons
Meg Lyons
The Bank of England has held interest rates at 4%, opting to keep borrowing costs unchanged as inflation remains almost double the 2% target and economic growth continues to flatline. The decision, though widely anticipated, has prompted a mixed response from across the credit and business sectors, with some welcoming stability, while others warned that a vital chance to boost the economy has been missed.
For many small and medium-sized enterprises, the hold feels like a setback. Nick Smith, Group Managing Director at Reward Funding, argued that
“a crucial opportunity to support UK SMEs has been missed, especially given the difficult economic state.” He pointed to falling job openings and stagnant growth as evidence that businesses are under mounting strain, insisting that even a modest cut “would have provided much-needed breathing room to ease cash flow pressures and support potential investment.”
Others struck a more pragmatic note. Neil Rudge, Chief Banking Officer for Commercial at Shawbrook, acknowledged that while SMEs are likely to be disappointed, the move was not unexpected given recent stubborn inflation figures.
“Business owners will be hoping momentum is heading in the right direction, and as rates fall, SMEs could benefit from lower borrowing costs, making previously shelved expansion plans more viable in the new year,” he said.
In the asset finance sector, Mike Randall, CEO of Simply Asset Finance, welcomed the short-term certainty but cautioned that the wider backdrop remains challenging.
“Flat rates will be welcomed for now, but rising employer costs and uncertainty around November’s Budget could create a challenging backdrop for SMEs,” he said. He stressed that what businesses need above all is “clarity and stability from policymakers, so that short-term resilience can be translated into sustained growth and investment for the future.”
Households are also grappling with what a prolonged period of high rates means for their personal finances. Ben Mitchell, Director of Savings at Chetwood Bank, noted that while the decision was expected, it leaves savers in a precarious position.“Savers might have been enjoying the higher rates that have been available over the last couple of years, but these aren’t guaranteed to continue into the future,” he warned, adding that with UK Savings Week beginning on Monday, now is an important moment for households to reassess whether their money is really working hard enough.
In the mortgage and property markets, the pause could provide a welcome window of stability. Nick Hale, CEO of Movera, described the decision as giving brokers and conveyancers “breathing space” to focus on client relationships and streamline transactions. “Clients will be looking for clarity on whether now is the right time to move or remortgage,” he said. “If inflation turns in the coming months and the base rate falls with it, efficiency will be the only way to stay afloat in a buoyant market.”
Looking ahead, attention now turns to whether the MPC could pivot towards cuts later this year. Matt Harrison, Customer Success Director at Finova Broker, suggested that with inflation tracking below the Bank’s forecast, November may bring a turning point. But he warned against overconfidence: “With no guarantee, brokers with clients erring on the side of caution will need to manage expectations carefully.”
The hold ultimately underscores the Bank’s delicate balancing act - keeping up the fight against inflation while trying not to stifle already fragile growth. Businesses and households alike will be watching closely for signs of which way the balance tips in the months ahead.
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