Another hold from the Bank of England on rates – the impact on savers and businesses

The Bank of England’s Monetary Policy Committee (MPC) held the base rate at 3.75% for the sixth consecutive time at its 17 September meeting. Despite growing inflation – now well above 2% target –and other leading central banks raising their rates, the outcome was what analysts expected.

The vote was 6-3, with Governor AndrewBailey voting to hold the rates and the same members that voted for the raise in July maintained their position in September. This suggests a continued holdis less likely towards the end of the year, as the same objections continue to be brought up.

The upward trajectory for inflation

UK inflation rose to 3.1% in August, and theBank expects this to keep climbing. Protracted conflict in the Middle East continues to push energy prices up, with those costs working their way through both household bills and business overheads.

As of today, the Bank of England is also theoutlier. The Federal Reserve and the European Central Bank have both raisedrates to curb inflation in home markets, indicating a global direction oftravel UK savers and businesses can also expect.

A hold isn’t a free pass for savers

While a hold might feel like some much-needed respite for savers, this is not the moment for inaction. Cash sitting in low-interest accounts will continue to lose real value every month that inflation runs above it, regardless of the interest rate.

Rather than pausing to wait and see what unfolds at the Budget and the next MPC meeting on November 5^th, now is the time for advisers to discuss a cash strategy with their clients to generate inflation-beating returns.

For businesses, idle cash is a cost

Businesses already absorbing higher energy and wage costs cannot treat cash reserves as an afterthought. Every pound left sitting in a low-yield account is a pound not doing any work. That cost is one most businesses can avoid, and few can afford.

With a rate rise looking more likely in November, this is also a sensible point for advisers to review clients’ cash strategies, and ensure the cash that won’t be needed at short notice is held where it can get the top rates – or at least provide the certainty today’s policy environment might be missing.

Schools and not-for-profits face the same challenge

Schools, charities, and other not-for-profits often hold reserves for strategic reasons. Not because there’s limited awareness, or a lack of will to act. But because it's a safety net that can cover a bad year, a capital project, or an expected cost.

Safety is a clear priority. But safety does not need to conflict with competitive rates. Reserves spread across several banks can capture stronger rates, maintain FSCS protection, and even grow those holdings. This is a matter of governance, not just gains.

The bottom line

Inflation is rising and three members of the Committee already want a rise in rates now, and the Budget is a handful of weeks away. The country finds itself back in a place of uncertainty and speculation, however, now is the time to review the position of savings and make sure they are earning what they deserve to.

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