Bank of England keeps interest rate at 4%

Bank of England keeps interest rate at 4%

06 Nov 2025

Simeon Willis, Chief Investment Officer, XPS Group, commented: "The MPC’s decision is in line with expectations earlier in the week, and therefore, the impact on pension schemes is negligible. Longer-term interest rates, which are what matter most to pension schemes, have demonstrated dislocation from short-term rates, trading at much higher yields for the last 6 months.

Even in light of the recent falls in yields over October, reflecting in part more favourable inflation figures, longer-term yields are still higher than might reasonably be considered best expectations of future short-term interest rates. This reflects the DMO’s challenge of issuing gilts in the current environment. Pension scheme appetite is largely satiated with existing gilt holdings, and there is additional supply in the form of ongoing quantitative tightening on top of regular issuance to finance the cash-strapped government.

Pension scheme funding remains very favourable, given the relatively high yields we continue to witness at longer maturities."