The Bank of England's Monetary Policy Committee (MPC) has voted 8-1 to hold the base rate at 5% in a widely expected decision.

One member voted to cut the rate to 4.75%.

In August, the Bank cut the base rate by 0.25 percentage points (0.25%) to 5% - the first cut in over four years.

Yesterday the US Central Bank cut its interest rates by 0.5 percent points, a bigger cut than expected, to the range of 4.75%-5%. It was the first reduction in over four years.

The Bank of England MPC said there were no strong reasons to cut the rate today.

In its monetary policy statement today the MPC said: "At its meeting ending on 18 September 2024, the MPC voted by a majority of 8–1 to maintain Bank Rate at 5%. One member preferred to reduce Bank Rate by 0.25 percentage points, to 4.75%.

"The Committee voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100 billion over the next 12 months, to a total of £558 billion.

"Monetary policy decisions have been guided by the need to squeeze persistent inflationary pressures out of the system so as to return CPI inflation to the 2% target both in a timely manner and on a lasting basis. Policy has been acting to ensure that inflation expectations remain well anchored."

"In the absence of material developments, a gradual approach to removing policy restraint remains appropriate. Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.

Earlier this week ONS announced the CPI rate of inflation in August was 2.2%, unchanged from the previous month.

Reacting to the base rate decision, Lindsay James, investment strategist at Quilter Investors, said: "Despite the supersized rate cut in the US yesterday and cuts continuing to be enacted in Europe, the Bank of England has decided to hold rates following its first cut in four years last month.

"However, while today may be a pause, the general consensus is to expect more rate cuts this year and into next as the economic momentum that had built up slows and inflation remains close to target. Two more cuts are expected by financial markets, and with time running out in 2024, the next meeting is likely to see the BoE’s next cut delivered."

Dean Butler, managing director for Retail Direct at Standard Life, part of Phoenix Group said: “There had been some discussion of a possible further move down to 4.75% this month following the first US rate cut in four years, however the latest inflation data showing the headline rate still above target with rises in service and core inflation seems to have put this to rest for now.

"The 10% energy price cap kicking in from 1st October seems likely to push headline inflation up further, so it seems safe to say any rate cuts in the near future will be incremental."  

Eric Silvestre, senior investment analyst at digital wealth manager Wealthify, said: “After the latest inflation data, the decision to keep interest rates unchanged at 5% was widely expected by the markets. Although headline inflation is close to the Bank of England’s 2% target, a more persistent services inflation of 5.6% serves as a reminder that the fight against rising prices is far from over."

• The next Bank of England base rate review is due on 7 November.