Interest rates kept on hold once again

Interest rates have been frozen at 3.75% once again - that’s the six rate freeze in a row.

The Bank of England’s decision was widely expected given the uncertain economic backdrop.

While the UK economy defied predictions by expanding by 0.4% in July, the crisis in Iran is still ongoing and putting pressure on energy prices.

And that has a knock-on effect on everything from our gas and electricity bills to what we pay for essentials in the shops.

Inflation, meanwhile, rose from 2.9% to 3.1% in the year to August 2026.

What are interest rates?

The Bank of England’s base rate influences the cost of borrowing, so if you have a tracker or variable rate mortgage, for example, your monthly payments are likely to be go up if the base rate increases.

But higher interest rates are often welcome news for savers, as you’ll get a larger return on your savings.

How are interest rates connected to inflation?

Interest rates are the main lever the Bank of England can pull to keep inflation close to its target of 2%.

When inflation is high, interest rates may be increased so people are encouraged to save rather than spend.

This can reduce demand for goods and services and, over time, help to ease the pressure on prices.

And if inflation is at or near the target, the Bank of England might hold rates steady or reduce them.

What can I do if I’m struggling?

If day-to-day expenses are putting you under financial pressure, then there are steps you can take.

Create a household budget

Make sure you know exactly how much money you’ve got coming in and going out.

You’ll then be able to prioritise essential expenses like bills and see where you can make savings.

Check our guide to how to create a budget.

See what benefits you can claim

If you’re struggling with the cost of living, you might be entitled to some financial support.

Get in touch or try our benefits calculator to see what help you could be eligible for.

Get help with your debts

If you’re feeling weighed down by debt, contact us for confidential, practical and impartial debt advice.

Check our regular money saving tips

Keep checking back here for our round-ups of standout deals and low-cost recipes that can save you money in the supermarket.

We’re also regularly sharing handy advice on how you can save money, such as:

• how to save energy
• how to keep the cost of your food shop down
• 50 ways to cut your fuel costs