MercoPress. South Atlantic News Agency

Bank of England keep interest rate on hold at 3,75%

The BOE said that monetary policy is being set to ensure that the inflation rate “not only reaches 2% but remains sustainably at that level in the medium term”

The Bank of England’s Monetary Policy Committee (MPC) voted by a narrow 5-4 margin to keep interest rates on hold at 3,75%. In its first meeting of 2026, four members voted to reduce the benchmark interest rate by 25 basis points. Markets reacted positively with sterling at US$ 1,36.

 The BOE’s policymakers last voted narrowly to cut interest rates in December, but analysts had expected the central bank to hold rates steady in February, given better-than-expected monthly growth figures and persistent inflation, at 3.4% in December, the latest data available.

The BOE said that monetary policy is being set to ensure that the inflation rate “not only reaches 2% but remains sustainably at that level in the medium term, which involves balancing the risks around achieving this.”

“On the basis of the current evidence, the extent and timing of further easing in monetary policy will depend on the evolution of the outlook for inflation,” the statement said, although it added that it expected the inflation rate to “fall back to around the 2% target from April.”

The BOE’s Governor Andrew Bailey was among the MPC members who voted to keep rates on hold. “I expect to see quite a sharp drop in inflation over coming months,” he said in a statement.

“Overall, the risks from inflation persistence appear to have continued to reduce. I therefore see scope for some further easing of policy. This does not mean that I expect to cut Bank Rate at any particular meeting. I will go into the coming meetings asking whether a cut is justified,” he said.

The next MPC meeting is scheduled for 19 March.