- Decision
- Maintain
- Rate change
- 0 bps
- bank rate
- 3.75%
The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to hold Bank Rate at 3.75 % at its 18 March meeting, judging that the sharp, conflict-driven jump in global energy and commodity prices—Brent crude above USD 100/bbl and European gas near EUR 50/MWh—will lift near-term inflation while dampening activity, with policy best left unchanged to assess the balance of risks. After three 25 bp cuts between May and December 2025, the rate has been on hold since February. The operating stance is maintained with the stock of UK government bonds in the Asset Purchase Facility at GBP 528 bn. CPI inflation, 3.0 % in January, is now expected to run around 3–3½ % over the next two quarters—about ½ pp higher than envisaged in February—amid slowing private-sector regular pay growth (3.3 % y/y in the three months to January), flat January GDP and only 0.1–0.2 % underlying growth in Q1, and an unchanged 5.2 % unemployment rate; broad money (M4ex) is growing 3.6 % y/y. The conflict has also tightened global financial conditions, with UK corporate spreads wider and the dollar stronger. Stressing vigilance against energy-led second-round effects but also mindful of potential slack from weaker demand, the MPC reiterated it is “ready to act as necessary” to keep inflation on course for the 2 % target.
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.