8:11 am, June 20, 2025
Expecting the Bank of England to reduce interest rates was ‘unrealistic’ but a cut would have helped build ‘greater financial stability for the automotive sector’.
That is according to Cox Automotive which admits the central bank’s recent decision to hold rates is ‘understandable’ given the current economic climate.
The Bank’s Monetary Policy Committee (MPC) yesterday (June 19) announced that rates will be kept rates unchanged at 4.25% following a a split vote.
The MPC said a ‘gradual and careful approach’ to reducing borrowing costs continued to be the right course of action.
In response to the news Cox Automotive has said that rising costs continue to be a challenge for automotive businesses.
However, insight director Phil Nothard said there have been positive signals so far this year, especially in the finance sector.
He said: ‘While the Bank of England’s decision to hold rates is understandable amongst evolving economic challenges, including the risk of rising oil prices, the pressure is being felt across the economy.
‘Rising costs continue to be a challenge for both motorists and automotive businesses, and increasing oil costs will only exacerbate this.
‘We have seen positive signals for the car finance industry, rebounding strongly in the first half of the year.
‘While expecting rate reductions may be unrealistic, further rate reductions would help continue this rate of recovery and contribute significantly to building greater financial stability for the broader automotive sector.’
Outlining its decision to hold rates, the MPC pointed to a ‘highly unpredictable’ world amid rising energy prices.
It also noted that Donald Trump’s tariff policy was posing risks to global trade and continuing to create uncertainty.
But it said that deals struck between the US and other countries, including the UK, meant that the direct impact of the “trade shock” on global growth could be smaller than it had forecast last month.
Confirming the decision to hold, Bank governor Andrew Bailey said: ‘Interest rates remain on a gradual downward path, although we’ve left them on hold today.
‘The world is highly unpredictable.’
The Monetary Policy Committee voted by a majority of 6-3 to keep interest rates at 4.25%
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— Bank of England (@bankofengland) June 19, 2025
Rachel Reeves said the Government respected the Bank’s decision as she spoke at The Times CEO Summit.
Speaking in central London, the Chancellor said: “We respect independent economic institutions, and the Bank has got an incredibly important but difficult job to do.
‘We want them to set the monetary policy that is appropriate for meeting the inflation target, because we also saw in the last parliament a double-digit inflation which was so challenging for businesses, but also family finances, which also has a knock on impact on business.’
