The Bank of England (BoE) has voted narrowly to hold interest rates at 4.0% but signalled borrowing costs could begin to fall as soon as next month. The Monetary Policy Committee voted five to four to keep the BoE rate unchanged, with Governor Andrew Bailey using his casting vote to maintain the hold. It comes amid easing inflation and signs of a slowing economy, and it was the closest split since the Bank began cutting rates in summer 2024. The BoE said it believes inflation has now peaked after holding steady at 3.8% in September, still almost double its 2% target. It forecasts that inflation will fall towards 3% early next year and return to target by the end of 2027. Latest projections from the BoE suggest that GDP growth will slow from 1.5% this year to 1.2% in 2026, before recovering to 1.6% in 2027 and 1.8% in 2028. Growing divisions within the committee were highlighted when four members backed an immediate quarter-point cut 3.75, arguing that the economy was weakening and the disinflation process was well underway. Bailey, on the other hand, joined by a further four members opted to hold. The decision comes just weeks before Chancellor Rachel Reeves MP delivers her Budget on 26 November. Reeves has signalled that she may raise taxes to reduce government borrowing, a move that could slow growth further and influence the BoE’s next step. For borrowers, the decision means no immediate change in mortgage repayments for those on variable or tracker deals. However, lenders have already begun lowering fixed-rate offers in anticipation of future cuts, suggesting that expectations of a December reduction are already being priced in. Savers, meanwhile, may soon see returns fall if banks follow suit.