JUST IN: Bank of England MPC holds interest rate at 3.75% amid inflation concerns

Economy & Policy, International

LONDON, United Kingdom (NPA) — The Bank of England has maintained its benchmark interest rate at 3.75 per cent, citing continued uncertainty over global energy prices, inflationary pressures and the broader economic outlook.

The decision was announced on Thursday following a meeting of the Monetary Policy Committee (MPC) that ended on June 17.

According to the bank, seven members of the committee voted to keep the Bank Rate unchanged at 3.75 per cent, while two members favoured a 0.25 percentage-point increase to 4.0 per cent.

In its June 2026 Monetary Policy Summary, the MPC said global energy prices had declined since its previous meeting following developments in the Middle East, but remained above pre-conflict levels and continued to exhibit significant volatility.

The committee noted that the full impact of the energy shock on the UK economy remains uncertain.

“Monetary policy cannot influence energy prices but is being set to ensure that the economic adjustment to them occurs in a way that achieves the 2 per cent inflation target sustainably,” the MPC said.

The committee stated that the appropriate policy response would depend on the scale and duration of the energy shock and how its effects spread through the wider economy.

Official data showed that Consumer Price Index (CPI) inflation had eased to 2.8 per cent since the previous MPC meeting.

However, the bank warned that inflation is expected to rise later in the year as the impact of higher energy costs continues to feed through to households and businesses.

The MPC said the risk of sustained inflationary pressures through higher prices and wage demands would increase if elevated energy prices persist for an extended period.

At the same time, it noted that the labour market continues to soften, while signs of weakening economic activity could help moderate inflationary pressures.

The committee added that borrowing costs for households and businesses remain significantly higher than they were before the recent energy shock, a factor expected to contribute to lower inflation over time.

“Taking all the risks to the economic outlook into account, the Committee judges that it is appropriate to maintain Bank Rate at this meeting,” the statement said.

The MPC reiterated its commitment to achieving the bank’s medium-term inflation target of 2 per cent and said it would continue to monitor developments in the Middle East and their impact on the UK economy.

The committee also signalled its readiness to adjust monetary policy if necessary to ensure inflation remains on track to meet the target sustainably.

The next Bank of England interest rate decision is scheduled for July 30, 2026.