Bank of England leaves rates on hold

An inevitable decision and best for the current market. Mortgage rates have already shot up around 1% on average so no further intervention needed at the moment. Huw Pill’s sole vote to increase base rate to 4% presents a bitter pill to swallow for borrowers, not the tonic needed for the economy.

Not a particular surprise to anyone, however what we all hope it will do is calm SWAP rates and in turn give some confidence to lenders to reduce their fixed rates. We will see in the fullness of time of course, but the Bank of England has got it right here - they are being pulled in both directions by different economic factors, so sticking to a 'wait and see' approach was the best course of action.

In a cautious middle-ground decision, the Bank of England held interest rates unchanged at 3.75%, voting 8-1 to pause, with the sole dissenter, chief economist Huw Pill, favouring a 25bp rise to 4%. The decision reflects a "wait-and-see" stance as the MPC weighs a cooling domestic economy against the inflationary pressure of an energy shock triggered by the Iran war. Brent Crude has surged past $125 a barrel on Middle Eastern tensions, raising fears that inflation, currently at 3.3% could prove sticky on the way down. By holding steady, the Bank avoids over-tightening into a potential slowdown while also protecting the pound; a rate-driven sterling sell-off would make dollar-priced imports costlier still. For households, the pause offers little relief: mortgage swap rates have already risen, pushing fixed-rate deals higher as markets price out cuts for 2026, and while savers benefit from persistently elevated yields, real returns remain thin with CPI still above target.

Another hold from Threadneedle Street. Brilliant news, as inflation is heading for 4%, energy bills about to jump 12%, and the best we get from the Bank of England is 'we'll see how it plays out.' I genuinely cannot wait for June, when I'm sure we'll be told to wait for August.

The decision by the Bank of England to hold rates isn’t a real surprise, markets had already moved away from expecting cuts and were even pricing in possible hikes later this year. What matters is the tone: this is a hawkish hold, driven by renewed inflation risks, particularly from energy.
For borrowers, it means no near-term relief. Mortgage and loan costs stay elevated, and expectations of higher-for-longer rates could keep fixed deals expensive.
For savers, it’s supportive but not game-changing and rates should hold up, but without further increases.
Overall, the shift is from “when do rates fall?” to “could they rise again?”, which is the bigger story.

This wasn’t a confident decision from the Bank of England it was a cautious one

They’ve held at 3.75% but the minutes make one thing clear they’re uncertain Inflation risks are still there especially with global energy pressures and even within the committee there’s disagreement with one member already pushing for a rate rise

They’re not in control they’re managing risk

For mortgages this changes nothing immediately Rates are driven by expectations not just the base rate And if anything the tone of those minutes keeps pressure on lenders because inflation could still move higher

For savers you’re holding steady but still losing ground in real terms

For the wider economy it’s a balancing act push too hard and you damage growth do too little and inflation sticks around

Bottom line this wasn’t a strong signal it was the Bank buying time

And the key question now is simple if inflation doesn’t fall how long can they keep sitting on the fence