- Decision
- Maintain
- Rate change
- 0 bps
- bank rate
- 4.25%
The Bank of England’s Monetary Policy Committee kept Bank Rate unchanged at 4.25% at its 18 June meeting, voting 6–3 for no change as it judged that, despite “substantial disinflation” and clearer signs of labour-market slack, policy should stay in restrictive territory to ensure inflation returns to the 2% target. After 25 bp cuts in both February and May, the policy rate has been lowered by a cumulative 50 bp this year. Twelve-month CPI inflation rose to 3.4 % in May from 2.6 % in March, largely on regulated and past energy price effects, and is projected to hover near 3½ % through year-end before easing in 2026; pay growth has continued to moderate and the MPC foresees a “significant” further slowing, while underlying GDP remains weak and vacancy indicators point to a loosening jobs market. The Committee noted higher oil and gas prices linked to escalating Middle-East conflict and persistent global trade policy uncertainty as key external risks. Re-affirming that policy “is not on a pre-set path”, members said Bank Rate must stay restrictive for “sufficiently long”, with future moves to depend on evidence of waning inflation persistence and the evolving balance of domestic supply and demand.
Rate evolution
Since June 2025, the Bank of England has cut Bank Rate by 50 basis points from 4.25% to 3.75%, with reductions in August and December, an autumn pause and holds in April, June, July and September 2026, citing substantial disinflation, weak GDP growth, a loosening labour market and moderating pay. The Monetary Policy Committee remained vigilant over services inflation, expectations and wage and price persistence as administered, food and energy prices lifted headline CPI inflation, but by late 2025 and early 2026 it judged persistence risks less pronounced and weaker demand more apparent as CPI inflation peaked and pay and services inflation eased further, while retaining a gradual, non-pre-set easing bias.
In April, the Committee voted 8-1 to maintain Bank Rate at 3.75%, with one member preferring an increase to 4%, as the Middle East conflict raised the energy price outlook and CPI inflation increased to 3.3%, flagging risks of second-round effects while noting that a loosening labour market, a weakening economy and tighter financial conditions could contain inflationary pressures. It held Bank Rate at 3.75% by a 7-2 vote in June as CPI inflation fell to 2.8% and global energy prices declined but remained above pre-conflict levels and volatile, then held again by a 6-3 vote on 29 July, when three members preferred an increase to 4% and persistent energy-price volatility and second-round risks tilted inflation risks upward despite continued underlying disinflation and a fall in CPI inflation to 2.6%.
At its meeting ending on 16 September, the Committee maintained Bank Rate at 3.75% by another 6-3 vote, with three members again preferring an increase to 4%, as the protracted Middle East conflict drove further increases in volatile energy prices and CPI inflation rose to 3.1% in August. It noted little evidence so far of material second-round effects and said soft labour market conditions and higher interest rates faced by households and businesses would reduce inflation over time despite slightly stronger activity, but judged that risks to the inflation outlook had tilted further to the upside since July.