The Bank of England opted to maintain borrowing costs at 5%, but it also stated that it should be able to lower interest rates "gradually over time."

The decision was made although inflation remained at 2.2% last month and prices continued to climb a little faster than the Bank's objective.

The head of the bank, Andrew Bailey, stated that low inflation was "critical." "Thus, we must exercise caution to avoid making too many or too quick cuts," he stated.

Experts believe that in November, the Bank will reduce interest rates even further.

It was widely anticipated that interest rates would remain unchanged after being lowered from 5.25% in August, the first decrease since the pandemic's start in 2020.

Of the nine people on the Bank's rate-setting committee, just one cast a vote in favour of a decrease.

The rates that High Street banks and lenders set are determined by the basic interest rate.

Although the increased level has resulted in greater borrowing costs for credit cards and mortgages, saving returns have improved.

Mortgage rates rise when interest rates rise. Landlords may then decide to increase rent in order to offset the increased repayments.

Furthermore, even though there was "improved sentiment and expectations" of higher economic growth, the Bank cautioned that it still anticipated a lower expansion of 0.3%, down from 0.4%, between July and September.

The UK's economy has grown slowly in recent years, but the incoming Labour administration has promised to turn this around.

(Sources: bbc.co.uk)