The Bank of England has opted once again to hold the base rate at 5.25 per cent, Azernews reports, citing a foreign media outlet.

The decision marks its fifth pause in a row, after the Monetary Policy Committee voted to hold the base rate first in September, then in November, December and February.

Prior to that, there had been 14 consecutive base rate hikes since December 2021.

We explain why the Bank of England has paused interest rate rises and what it means for your mortgage, savings and the wider economy.

Today's base rate decision was widely expected.

The aim of increasing the base rate in the first place was to reduce the rate of inflation, which has led to higher costs in many areas of household spending including energy bills and food shopping.

By raising the cost of borrowing for individuals and businesses, the central bank hoped to reduce demand, slowing the flow of new money into the economy.

In theory, more expensive mortgages and better savings rates should also encourage people to save more and spend less, further pushing down inflation.

Inflation reached a peak of 11.1 per cent in October 2022. From February 2023 to November 2023 it consistently fell, and there were hopes a base rate cut may be on the horizon.

However, a surprise rise in inflation in December 2023 made that far less likely.

Consumer price inflation edged up from 3.9 to 4 per cent, which disappointed against forecasts of a fall to 3.8 per cent. It then remained at 4 per cent in January, once again disappointing based on forecasts.

However, inflation came in at 3.4 per cent in February as reported yesterday - slightly below the market forecast of 3.5 per cent.