The Monetary Policy Committee’s (MPC) resolution to maintain the current rate comes after a 0.25 percentage point reduction in May. The BoE remains cautious amidst a challenging global economic landscape, including the potential effects of US trade policies and the escalating conflict between Israel and Iran, which threatens to impact oil prices.

Andrew Bailey, the Governor of the Bank of England, stated that while interest rates are on a “gradual downward path”, the committee chose to keep them on hold for the present. “The world is highly unpredictable”, Mr Bailey commented, adding, “In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation”.

Earlier this week, the Office for National Statistics reported that the UK’s inflation rate for May stood at 3.4%, considerably higher than the Bank’s 2 per cent target. This persistent inflationary pressure was a key factor in the decision.

Despite the majority vote, there was a notable division within the MPC. Deputy Governor Dave Ramsden, along with external members Swati Dhingra and Alan Taylor, advocated for an immediate further cut to 4 %.

Following the announcement, the pound sterling remained stable against the dollar, trading at approximately $1.341.

Felix Feather, Economist, at Aberdeen said: “As expected, the Bank of England kept its policy rate on hold at 4.25% today. But the vote on the MPC was marginally closer than expected, with three members voting for a cut.

“The slightly more dovish than expected vote split doesn’t change our view that the Bank of England is most likely to stick to a quarterly pace of cuts going forward in line with its ‘gradual and careful’ guidance.

“But it does suggest the MPC is somewhat sensitive to weaker labour market data, and serves as a reminder of the downside risks to our rate call.

“Meanwhile, further escalation of the conflict in the Middle East could push up on UK inflation, which could see the Bank move more cautiously.”

Matt Swannell, chief economic advisor to the EY ITEM Club, said: “Having cut Bank Rate in May, it came as no surprise that the MPC continued with its established cut-hold pattern, keeping Bank Rate unchanged at 4.25%.

“Even though the MPC stopped short of explicitly promising a reduction in Bank Rate at its next meeting, we continue to expect another 25bps cut in August.”

Scottish Friendly savings expert Kevin Brown added: “By holding rates, the Monetary Policy Committee has once again decided to hit the pause button – but for savers, this may be as good as it gets.

“After years in the doldrums, savings rates now look respectable again. But with markets still pricing in further rate cuts later this year, the window for locking in decent returns is starting to close.

“The MPC is clearly nervous about fresh inflation risks, especially from global energy markets. But unless there’s another sustained spike, it’s only a matter of time before rates start to fall – and with them, the deals on offer to savers.

“Anyone sitting in a high street account earning next to nothing should act now. Fixed-rate accounts and ISAs are still offering strong returns, but they won’t stick around forever.

“In a turning rate cycle, savers need to be proactive – the best deals go early and timing is everything.”