Bank of England holds rate at 3.75%

June 18, 2026 (MLN): The Bank of England's Monetary Policy Committee voted 7-2 to keep the benchmark interest rate unchanged at 3.75% at its June meeting, opting to hold fire as policymakers weigh the inflationary fallout from the Middle East conflict against signs of a weakening domestic economy.

The decision came as the MPC assessed a fluid energy market backdrop.

Brent crude and UK wholesale gas prices had surged to an average of $100 per barrel and 116 pence per therm since the April Monetary Policy Report, though both retreated sharply to around $79 and 100 pence respectively in the days before the meeting following announcements of a potential Middle East peace deal.

UK CPI inflation eased to 2.8% in May, though the Committee warned the reading is expected to climb back above 3% in the third quarter and breach 3.25% by year-end as energy price effects continue to filter through.

Private sector wage growth came in at 2.9% annually in the three months to April, broadly near target-consistent levels, while the unemployment rate edged down to 4.9%.

Six of the seven members voting to hold Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden and Alan Taylor  cited evidence of underlying disinflation prior to the conflict and noted that higher borrowing costs already facing households and businesses are acting as a drag on inflation.

A seventh hold voter, Catherine Mann, flagged more prominent upside inflation risks but said an immediate increase was not yet warranted, according to a press release by the bank.

The two dissenters, Megan Greene and Huw Pill, pushed for a 25-basis-point increase to 4%, arguing that households and firms have become more sensitive to inflation outturns and warning that financial conditions could ease without an explicit rate rise.

The Committee said it stands ready to act as necessary to keep inflation on track to meet the 2% medium-term target, and will continue to monitor Middle East developments closely.

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