The Bank of England's Monetary Policy Committee (MPC) decided to hold the Bank Rate at 3.75% at its meeting concluding on June 17, 2026. This decision was reached with a majority vote of 7-2. Two members of the committee, whose names are not provided in the summary, voted to raise the Bank Rate by 0.25 percentage points to 4%. This marks the fifth consecutive meeting that the rate has been held at 3.75% since the last easing cycle in late 2025. This decision aligns with the expectations of most analysts and economists surveyed, who predicted no change for this meeting.
The context for this decision includes recent economic data and geopolitical developments. Inflation, as measured by the Consumer Prices Index (CPI), remained at 2.8% in May, unexpectedly staying at the same level as April and coming in lower than the 3% predicted by economists. This figure, while still above the Bank's 2% target, offered some relief. Additionally, a US-Iran peace deal announced by President Donald Trump several days prior to the MPC meeting helped stabilize global oil prices by promising the reopening of the Strait of Hormuz, a critical waterway for oil and gas supplies.
Despite the hold, there is notable division within the MPC. For six of the seven members who voted to maintain the rate, including Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, and Dave Ramsden, recent data suggested that underlying disinflation was on track, and the existing higher interest rates were working to reduce inflation. However, one member, Catherine L Mann,, while not voting for an immediate hike, saw upside inflation risks as more prominent. Some analysts, like Jack Meaning, expected two policymakers, Huw Pill and Megan Greene, to vote for a hike to 4% due to their hawkish stance. The bond market still reflects expectations of at least one rate hike, with two-year gilt yields at 4.17%, indicating a "pause, not a pivot" according to some observers.
