The Bank of England kept its base rate at 5.25% today for the fifth time in a widely expected decision.

The Bank’s Monetary Policy Committee voted 8-1 to keep the base rate on hold.

Although inflation is expected to drop in the coming months it remains unpredictable and experts expect the bank’s base rate to remain at a relatively high level until mid-year at the earliest.

CPI fell sharply in February to 3.4%, from 4% in January, putting inflation at its lowest level for 30 months.

The Bank's base rate is currently at its highest level for 15 years.

The MPC says it has no plans to waver from its strategy of trying to reduce CPI inflation towards its long-term target of 2%.

Jonny Black, chief commercial and strategy officer at Abrdn Adviser, said he still expects a rate cut to come this year.

He said: “A cut is still expected this year, although exactly when is still hotly debated. Some quarters suggest that rates could start coming down as early as June, but other indications point to the Autumn. What’s for sure is that the Bank won’t act until it's confident that the now diminishing fire of inflation won’t be blown back into full flame. Yesterday’s fall in inflation shows things are moving in the right direction.
 
“Lower rates won’t be uniformly ‘good’ or ‘bad’ for clients. Last week, a BoE survey into UK households’ attitudes around inflation found that although nearly a third of people said it would be better for them if interest rates were to go down, nearly a quarter would benefit more from a further hike. To me, this highlights just how much clients are going to value their advisers’ support in navigating whatever lies ahead. Some won’t perceive one or other outcome as in their best interests, and advisers have a role to play in explaining how their strategies are already designed to still deliver for them in the long-run, or what changes they will need to make to keep their goals in sight.”

Nick Henshaw, head of intermediary distribution at Wesleyan, agreed and said that today's announcement may prompt some clients to review their strategies.

He said: “This will be prompting a review of strategies as clients consider whether cash, which some will have recently increased their exposure to, will still deliver the best outcome for them. In some cases, their focus may now turn to other investment options, including equities.

“As always, it will be essential that clients’ investment strategies are suitable for their unique circumstances – something emphasised by the FCA yesterday in its ‘Dear CEO’ letter on retirement income. Some clients increasing or starting equity investment may benefit from looking closely at specialist funds – including ‘smoothed’ funds – that are well-placed to meet specific needs.”

The next base rate decision will be on Thursday 9 May.