The Bank of England has announced that the base rate of interest will remain unchanged at 5.25% as widely expected.

Despite a surprise fall in inflation in February to 3.4%, the central bank's Monetary Policy Committee (MPC) chose to hold the rate at 5.25% for the fifth time in a row.

Commenting on today's announcement, George Lagarias, Chief Economist at Mazars, said: “It is no surprise that the Bank of England didn’t change rates in this meeting. One rate cut generates expectations for more. So, despite the improving inflation and low growth numbers, it is natural for the central bank to want more affirmation before it embarks onto a new course. We are fairly positive, however, that the Bank will be reducing rates after the summer, unless a geopolitical event kicks off a new cycle of pressures on global supply chains.”

Neil Rudge, head of enterprise at Shawbrook, commented: “We may be entering the final push in the ongoing battle with interest rates that has dominated the business community’s attention for the last two years. A fifth consecutive hold on rates, another positive step towards normality, will likely be hailed as good news after what has been a tough time for many, especially considering the improving sentiment from the voting committee.

“Given this month’s encouraging inflation figures, some may be disappointed that the Bank of England did not decide to cut rates in line with this sense of potential recovery. However, it is likely that the Monetary Policy Committee is keen to wait for clearer signs that show growth and services inflation are cooling and stabilising sufficiently before looking to make this cut. If the last two years have taught us one thing, it is that cautious optimism is good.

“Furthermore, Rishi’s announcement to set out a package of reforms that he says will “unlock a tidal wave of opportunity” for the UK’s small businesses all together paints a positive picture for 2024.The promising signs of the UK economy’s ongoing recovery will likely bring optimism to the SME sector, encouraging more growth-focused business activity.”