UK interest rates – latest: Bank of England holds interest rates after Trump tariffs spark global uncertainty

The UK must increase the size of the army if it is serious about building the so-called coalition of the willing, the Liberal Democrats have said.

As Sir Keir Starmer is set to meet senior military leaders to discuss the operational phase of a Ukraine peacekeeping force, Helen Maguire, Lib Dem defence spokeswoman, said: “If Starmer is serious about building a coalition of the willing for Ukraine, he needs to give the British military more of the troops it needs to credibly support a reassurance force.

“As military chiefs meet in London today, the Lib Dems are urging the Prime Minister to now commit to reversing the Conservatives’ staggeringly irresponsible 10,000 troop cuts to the Army. That they allowed these reckless cuts to take place while there was a war raging on our continent is shameful.

“Reversing these cuts will send a clear message to both our allies and the dictator, Putin: that the UK is ready to step up and help guarantee a just peace for Ukraine, if one can be agreed.”

The dour Scotsman holding the title of chancellor of the Duchy of Lancaster and Cabinet Office minister, Pat McFadden, doesn’t seem much of a space cowboy but he has in common with Elon Musk an apparent zeal to eliminate waste.

Being more sensible and considerably less excitable than his (rough) US counterpart, McFadden has not yet egregiously breached the British constitution but he has summarily abolished almost all of the civil service “credit cards”, a distinctly Doge-like action. It’s more than just a symbolic move…

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David Lammy has confirmed that a British national was wounded in an Israeli attack on a UN compound in Gaza on Wednesday, as he said recent attacks had been an “appalling loss of life”.

The Foreign Secretary told MPs: “Yesterday morning a UN compound in Gaza was hit, I can confirm to the House that a British national was amongst the wounded.

“Our priority is supporting them and their family at this time.”

Mr Lammy added that the attacks on Gaza on Tuesday night had caused the largest Palestinian death toll on a single day since the war began.

He said: “A number of Hamas figures were reportedly killed, but it’s been reported that over 400 Palestinians were killed in missile strikes and artillery barrages. The majority of them were women and children.

“This appears to have been the deadliest single day for Palestinians since the war began. This is an appalling loss of life, and we mourn the loss of every civilian.”

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Responding to today’s interest rate decision by the Bank of England, Suren Thiru, Institute of Chartered Accountants in England and Wales Economics Director, said: “The decision to keep interest rates on hold will be a palpable letdown to those households looking for relief from high mortgage bills and businesses preparing for April’s major jump in business costs, including the national insurance hike.

“While the vote to ‘hold’ was emphatic, there was enough in the meeting minutes to suggest that rate setters remain concerned over the health of the economy, keeping the door wide open for a May interest rate cut.

“With inflation set to rise further and international headwinds growing, the path to materially lower interest rates remains filled with uncertainty. As such, rate setters will probably continue to maintain their slow and steady approach to loosening policy.”

The Chancellor must use the coming spring statement to “take responsible steps” that will pave the way for an interest rates cut, the Tories said.

Mel Stride, the shadow chancellor, said: “Interest rates staying higher for longer will mean higher mortgages for millions of people across the country.

“Because of Rachel Reeves’ Budget, inflation is above the Bank of England’s target, making it harder to bring interest rates down.

“Next week, during her emergency budget, the Chancellor must take responsible steps on spending, borrowing and debt to allow the Bank of England to cut interest rates.”

In response to the Bank of England holding interest rates, Chancellor of the Exchequer Rachel Reeves said: “We’ve had three rate cuts since the summer, but there’s still work to do to ease the cost of living.

“That’s why I’m fighting every day to put more money in the pockets of working people to deliver our plan for change, and why we protected workers’ payslips with no rise in national insurance, income tax or VAT, boosted the national living wage and froze fuel duty.

“In a changing world, I’m determined to go further and faster to kickstart growth, and bring in a new era of stability, security and renewal that protects working people and keeps our country safe.”

When the BoE made the Bank Rate cut last month, inflation had been on the decline. However, a mid-February report showed Consumer Prices Index (CPI) inflation rose to 3 per cent in January, from 2.5 per cent in December.

With inflation therefore rising again – and, importantly, rising by more than expected – interest rates were always unlikely to be cut this time around.

Lower interest rates can be used to encourage businesses to resume investing as the cost of borrowing is lower, which can give the wider economy a boost.

However, it can also lead to rising prices as investment in more jobs or salaries mean people have, and spend, more money; therefore the reverse is also seen as true in that if demand is lower, it can help reduce these potential price rises – or in other words, it can help stem inflation.

Andrew Bailey, Governor of the Bank of England, said: “There’s a lot of economic uncertainty at the moment.

“We still think that interest rates are on a gradually declining path, but we’ve held them at 4.5% today.

“We’ll be looking very closely at how the global and domestic economies are evolving at each of our six-weekly rate-setting meetings.

“Whatever happens, it’s our job to make sure that inflation stays low and stable.”