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Bank of England holds base rate at 3.75% in "cautious but necessary" move: "Savers benefit most"

ended 05. February 2026

THE Bank of England has held the base rate at 3.75% in a decision widely expected  with experts saying it's a “cautious but necessary” move that will benefit savers most.

The Monetary Policy Committee (MPC) voted xx to xx in favour of a hold.

This comes as inflation remains “sticky” above the Bank's target of 2% – it was at 3.4% in December.

Experts said the Bank is using a “wait and see” approach to work out if the base rate is able to come down further this year.

They say that a hold means more of the same with everyone struggling with tight budgets.

Savers benefit most, experts claim – but the interest on savings accounts have been reducing this year anyway.

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said: "The Bank of England's decision to hold rates at 3.75% is cautious but necessary given inflation's rise to 3.4%. This ‘wait and see’ approach prioritises price stability over short-term growth. For consumers, it means continued cost-of-living pressures. 

"Borrowers on tracker or variable rates face unchanged payments, while those seeking fixed mortgages should act quickly as lenders raise rates. Savers benefit most – high-interest accounts above 5% remain available, offering a crucial window to lock in returns before cuts resume. Though the rate hold may disappoint those struggling with high bills, controlling inflation that erodes purchasing power remains the priority. 

“The plateau extends financial pressures but protects against the greater harm of unchecked price increases that diminish everyone's income. This measured stance balances immediate relief against longer-term economic stability, acknowledging that sustainable recovery requires inflation control first.”

Adam Stiles, Managing Director at London-based Helix Financial Partners, said the Bank of England is being cautious.

He added: "In a world of political and economic instability, the Bank of England has opted for cautious stability. The news isn't a surprise. All things remain equal until the next meeting in March. 

“Savers should see stability with rates, as will borrowers assuming Swap rates hold steady. Borrowers would of course welcome a drop in rates but a wait-and-see approach to other economic factors is the right decision.”

Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, called for a new direction in the UK.

He added: "With Bailey in charge the Bank is always going to be cautious, so it's not surprise rates are on hold today. However, they should have been cut and should be cut again next month. 

“The economy is in the bin and employers are scared or hiring. Stubborn inflation shouldn't be a barrier to stimulating the economy as the cost of goods isn't been driven by consumer demand. It's time for a change in personnel to everyone running the economy. New governor, new chancellor, new chance."

Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said 

He continued: "The data confirms what many of us already know: the economic transmission mechanism is broken. We are taught that rate hikes incentivise saving and cool spending, but that logic fails when inflation is driven by non-negotiable public goods like energy and food. 

"People couldn't simply ‘choose’ to stop spending on essentials; the hikes just punished them for existing in a high-cost environment. The Bank of England’s strategy was flawed from the start. Using interest rates to fight supply-side inflation was like trying to put out a fire with a hammer, it didn't fix the issue, it just damaged the wider economy. 

“Now, we see the reality: the base rate is becoming irrelevant. Banks have already baked in their margins, cutting savings rates long before any announcement. It’s a one-way street where banks are quick to protect their spread but painfully slow to pass on benefits to savers. The base rate has become theoretical, while the real economy operates on a harsh reality of eroding value.”

Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said the hold doesn't change much for anyone.

She added: "Holding rates at 3.75% feels like the Bank choosing caution, and that is probably the right call. Inflation is easing but not beaten, and cutting too early would risk undoing hard won progress. This decision shows the Bank would rather wait for clearer proof than gamble with price stability. 

"For the average person, a hold means more of the same. Budgets remain tight, but there is no new shock to absorb. Mortgage holders avoid higher repayments, and while relief is not here yet, certainty matters when household finances already feel stretched. 

“For borrowers, especially those on variable rates or refinancing soon, high costs are sticking around for longer. For savers, this is the upside of a hold although we are already seeing banks cutting savings rates meaning they aren't as wed to the base rate as before.”

Michelle Lawson, Director at Fareham-based Lawson Financial, simply added: “Given all the circus going on at home and overseas right now, there was no other decision but to hold.”
 

13 responses from the Newspage community

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Editor
Tony RedondoVerified
Founder at Cosmos Currency Exchange
The Bank of England's decision to hold rates at 3.75% is cautious but necessary given inflation's rise to 3.4%. This "wait and see" approach prioritizes price stability over short-term growth. For consumers, it means continued cost-of-living pressures. Borrowers on tracker or variable rates face unchanged payments, while those seeking fixed mortgages should act quickly as lenders raise rates. Savers benefit most—high-interest accounts above 5% remain available, offering a crucial window to lock in returns before cuts resume. Though the rate hold may disappoint those struggling with high bills, controlling inflation that erodes purchasing power remains the priority. The plateau extends financial pressures but protects against the greater harm of unchecked price increases that diminish everyone's income. This measured stance balances immediate relief against longer-term economic stability, acknowledging that sustainable recovery requires inflation control first.
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Editor
Adam StilesVerified
Managing Director at Helix Financial Partners
In a world of political and economic instability, the Bank of England has opted for cautious stability. The news isn't a surprise. All things remain equal until the next meeting in March. Savers should see stability with rates, as will borrowers assuming SWAP rates hold steady. Borrowers would of course welcome a drop in rates but a wait and see approach to other economic factors is the right decision.
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Editor
Samuel Mather-HolgateVerified
Managing Director & IFA at Mather and Murray Financial
With Bailey in charge the Bank is always going to be cuautious, so its not surprise rates are on hold today. However, they should have been cut and should be cut again next month. The economy is in the bin and employers are scared or hiring. Stubborn inflation shouldn't be a barrier to stimulating the economy as the cost of goods isn't been driven by consumer demand. It's time for a change in personnel to everyone running the economy. New governor, new chancellor, new chance.
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Editor
Richard DavidsonVerified
Mortgage Advisor at onlinemortgageadvisor.co.uk
The Bank of England is taking a 'wait and see' approach, reflecting caution in the face of ongoing market uncertainty.

For the average buyer, mortgage rates remain significantly lower than a year ago, meaning there's still an opportunity to secure competitive deals despite today's hold.
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Editor
Craig FishVerified
Director at Lodestone Mortgages
This hold was nailed on for weeks. The economy is still fragile, and the Bank clearly doesn’t want to risk reigniting inflation by cutting too early. What’s telling is that some lenders have actually been increasing rates this week. That’s a clear sign the markets are nervous and swap rates aren’t giving lenders the confidence they need yet. For the average household, a hold brings stability but not relief. Mortgage holders coming off fixes in 2026 are still facing a big jump in payments compared to the ultra-low deals of previous years, and renters will continue to feel the knock-on effect. For borrowers, rates should remain competitive, but any meaningful falls will likely be gradual. For savers, it’s steady for now, but the long-term trend is still downward as cuts eventually come through.

This is a ‘wait and watch’ decision — and it’s the right one.”
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Editor
Philly PonniahVerified
Chartered Wealth Manager and Financial Coach at Philly Financial
Holding rates at 3.75% feels like the Bank choosing caution, and that is probably the right call. Inflation is easing but not beaten, and cutting too early would risk undoing hard won progress. This decision shows the Bank would rather wait for clearer proof than gamble with price stability.

For the average person, a hold means more of the same. Budgets remain tight, but there is no new shock to absorb. Mortgage holders avoid higher repayments, and while relief is not here yet, certainty matters when household finances already feel stretched.

For borrowers, especially those on variable rates or refinancing soon, high costs are sticking around for longer. For savers, this is the upside of a hold although we are already seeing banks cutting savings rates meaning they aren't as wed to the base rate as before.
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Editor
Jack TuttonVerified
Director at SJ Mortgages
The Bank of England holding the Base Rate will come as no surprise due to the ongoing battle that we are having with inflation. Where this is continues to prove sticky, the committee will struggle to justify a further cut to the Base Rate. Financial markets may be pricing in the fact that less cuts to the Base Rate are coming in 2026 than previously predicted, this is due to the 'SWAP' markets increasing in recent weeks which, in turn, has meant we started seeing mortgage lenders starting to increase their rates again.
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Editor
Mark O'ConnorVerified
Mortgage Advisor at Onlinemortgageadvisor.co.uk
It's no surprise that the Bank Of England have held rates , after rate cuts in 2025 and the latest in December.

Whilst economists feel the economy has had strong growth this year the issue is that Inflation still remains above the Bank Of Englands target at 2% , and is currently at 3.4% , this has been the main factor in holding rates.

I do expect more rate drop this year, lower interest rates can help boost economic growth and fuel consumer spending, but there is a danger this may lead to higher prices , it is a balancing act that the Bank Of England have to find to have a steady economy.
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Editor
Michelle LawsonVerified
Director at Lawson Financial
Given all the circus going on at home and overseas right now, there was no other decision but to hold.
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Editor
Aaron StruttVerified
Product and Communications Director at Trinity Financial
There was always going to be a pretty slim chance of a base rate change this month given the reduction we had just before Christmas.
Quite a few lenders have raised their rates over the last few weeks and HSBC and Barclays are the latest big lenders to increase the cost of their fixed mortgages. Most rates have gone up by around 0.1% although Nationwide raised some of its fixes by up to 0.19%. Santander offers a range of low-cost mortgages from 3.51% although its rates are likely to rise slightly over the coming days. The money markets seem to be pricing in a further Bank of England base rate cut in April, so I suspect even though rates are going up a bit now, they will come back down again. Fixed rates may well fluctuate for a while but remain competitively priced.
From a mortgage perspective there are lots of decent rates to choose from and acceptance criteria is getting better which means potential borrowers do not need such a large deposit to get on the property ladder.
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Kundan BhaduriVerified
Entrepreneur, Investor and Landlord at The Kushman Group
Today's decision is exactly what we expected from a central bank that has spent the last five years consistently driving via the rear-view mirror. By the time the MPC feels "confident" enough to cut, the damage to business solvency and consumer confidence will likely be irreversible.

What today's Hold means is another couple of months of punitive borrowing costs for businesses that are desperate to invest. It means another couple of months of misery for mortgage holders rolling off fixed deals. And crucially, it is a tacit admission that the Bank is terrified of the wage-price spiral currently being fuelled by the government’s own public sector pay deals.
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Rohit Parmar-MistryVerified
Founder at Pattrn Data
The data confirms what many of us already know: the economic transmission mechanism is broken. We are taught that rate hikes incentivise saving and cool spending, but that logic fails when inflation is driven by non-negotiable public goods like energy and food. People couldn't simply "choose" to stop spending on essentials; the hikes just punished them for existing in a high-cost environment.

The Bank of England’s strategy was flawed from the start. Using interest rates to fight supply-side inflation was like trying to put out a fire with a hammer, it didn't fix the issue, it just damaged the wider economy.

Now, we see the reality: the base rate is becoming irrelevant. Banks have already baked in their margins, cutting savings rates long before any announcement. It’s a one-way street where banks are quick to protect their spread but painfully slow to pass on benefits to savers. The base rate has become theoretical, while the real economy operates on a harsh reality of eroding value.
Copy

Nick Gatti0
Mortgage Adviser at NG Mortgages
Today’s hold at 3.75% is the least surprising move of the year. After December’s nail-biting 5-4 vote to cut, the Bank of England has hit the brakes. They’ve essentially told the market: "Steady on, we aren't in a rush."

If you’re waiting for rates to plummet, don't hold your breath. This hold was baked in weeks ago. While early January saw a "price war" with some fixes dipping toward 3.5%, the tide has turned. Swap rates (the wholesale cost lenders pay for money) have been twitchy, leading giants like Nationwide and HSBC to nudge rates up recently.

Lenders aren't feeling the heat to start a fresh price war; demand is steady enough that they can afford to play hard to get. For the 1.8 million people remortgaging in 2026, it’s a game of patience. We’re in a plateau - stability is the new sexy, but you'll need to be sharp to snag a deal before the next swap rate wobble.