The Bank of England’s Monetary Policy Committee kept Bank Rate unchanged at 3.75 % on 4 February by a 5–4 vote, judging that while CPI inflation (3.4 % in December) is set to drop to “around the 2 % target from April” as energy-related base effects and Budget-2025 measures feed through, it must also be confident that price and wage dynamics stay consistent with lasting price stability amid soft growth and a loosening labour market. Since August 2024 the MPC has lowered Bank Rate by a cumulative 150 bp, including a 25 bp cut to 3.75 % in December 2025. The Committee notes that policy remains restrictive but, as that restrictiveness has already diminished, further reductions “are likely,” though the timing and scale of any moves will be judged meeting-by-meeting. Pay growth and services inflation continue to moderate, the unemployment rate has edged above 5 %, and Bank staff see a slightly wider output gap alongside risks that weak demand and elevated household saving could push inflation below target. Softer UK import prices—helped by lower global energy costs and dampened export prices as US tariffs weigh on world trade—are adding to disinflation, yet the MPC is alert to residual risks from “greater inflation persistence.” Members agreed that global uncertainty and tariff developments warrant caution, and signalled that any additional easing will proceed at a slower pace as they seek “assurance about how the risks are evolving.”
Bank of England 2026-02-05
BoE holds Bank Rate at 3.75 % on 4 Feb (5–4 vote)
Bank of England’s MPC kept Bank Rate at 3.75 % by a 5–4 vote, expecting CPI to return to the 2 % target from April but wanting firmer evidence that wage and price pressures are durable. The Committee still views policy as restrictive and signalled that further cuts remain likely, though any easing will be smaller and decided meeting by meeting amid lingering inflation-persistence risks.