The Bank of England has announced its latest base rate decision.

As was widely expected the Bank’s Monetary Policy Committee (MPC) kept the base rate at 3.75% for a fourth consecutive meeting.

The UK inflation rate – which yesterday was sticking at 2.8% – remains above target but has not risen as high as many had feared because of the Iran War.

Inflation had been expected to rise to 3%. 

At its last meeting in April, the MPC signalled that interest rates could rise this year to curb inflation after a “significant energy price shock” from the war.

Last week, the European Central Bank increased its interest rate for the first time in almost three years, blaming the conflict for “generating inflation pressures”.

Kevin Shaw, National Sales Managing Director at LRG, says: “After a year in which the economic mood music has lurched from anticipating numerous rate cuts to as many rises, this stability is extremely welcome.

“Inflation is still 0.8% above the Bank’s 2% target and there is likely to be a lag in its reduction as a result of recent global instability. 

“But the picture is materially better than it looked just a few weeks ago. 

“If the ceasefire in the Middle East holds and oil prices continue to ease, that should feed gradually into confidence, costs and consumer behaviour.”

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Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “In making this decision, the Bank must weigh up whether to potentially compromise a slowing economy, including the jobs and housing market, in order to reduce the chances of inflation getting out of hand.

“We know how important the housing market is to the overall strength of the economy, bearing in mind the knock-on effects on so many other businesses. An increase in rates now would further reduce confidence and activity.

“With CPI inflation holding steady at present, the pressure is off a little from the Bank for an early increase, even if it means one will come a little later in the year.”

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Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, comments: “It was expected that base rate would be held at 3.75 per cent for another month, with the Bank of England treading carefully despite inflationary pressures. 

“This decision will improve the general mood of buyers, which is still very cautious. People are paying close attention to the situation in the Middle East and its effect on energy prices – there are recent signs of improvement in outlook and activity, but it still feels hesitant.”

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Iain McKenzie, chief executive of The Guild of Property Professionals, comments: “With signs that oil prices are starting to ease following improved sentiment around the Middle East situation, there is hope that inflationary pressures will start to moderate. 

“As the economic outlook improves and mortgage lenders continue to compete on rates, we could see confidence return and more buyers to re-enter the market. However, realistic pricing remains crucial, with buyers currently benefiting from the highest level of choice in over a decade.”

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Nicky Stevenson, managing director of Fine & Country, adds: “The recent reductions in mortgage rates from lenders are a positive step and, combined with a steadier economic environment, could help unlock demand over the coming months. 

“A recovery in confidence may take time to filter through, but the fundamentals of the housing market remain resilient.”

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Nick Leeming, chairman of Jackson-Stops, sees it like this: “Holding rates should help avoid additional pressure on affordability and support continued activity among buyers and sellers. 

“The market remains highly needs-driven, with people continuing to move for work, family and lifestyle reasons, and today’s decision provides a more predictable backdrop against which those decisions can be made.”

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And Simon Gammon of Knight Frank Finance says:”The Bank of England’s decision to hold rates, combined with weak pay growth and lower-than-expected inflation, will pave the way for mortgage lenders to cut rates over the coming weeks. 

“The repricing began earlier this week when Nationwide reduced its headline two-year fixed rate to 4.29%, which is now the cheapest fixed rate on the high street.

“Many lenders have fallen short of their lending targets so far this year and will be looking to win a greater share of business during the second half. 

“While we are unlikely to see a dramatic fall in mortgage rates, borrowers should benefit from a gradual improvement in deals over the summer, which will help support housing market activity later in the year.”