News and Announcements
Bank of England keeps rates on hold at 3.75%
By Abigail Townsend
Date: Thursday 30 Apr 2026
(Sharecast News) - The Bank of England left interest rates on hold on Thursday, as widely expected, despite rising inflation expectations.
The Monetary Policy Committee voted by a majority of eight-to-one to maintain the cost of borrowing at 3.75%. Huw Pill, the central bank's chief economist, voted for a rise, to 4%.
It is the second time the MPC has kept Bank Rate on hold since the outbreak of war in the Middle East, which has sent global energy prices soaring and reignited inflation fears.
Data published last week showed UK inflation had accelerated to 3.3% in March, driven by a surge in petrol prices, up from February's 3%. Prior to the first US attacks on Iran, the BoE had expected inflation to fall back to 2.1% by the second quarter, just ahead of its long-term 2% target.
In the minutes published alongside the decision, the MPC acknowledged that prospects for global energy prices were "highly uncertain", noting: "Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably." It added that the relevant policy stance would depend on the "scale and duration of the shock", and how that affects the UK economy.
It also reiterated it "stands ready to act as necessary" to prevent a spike in inflation.
Explaining his vote, however, Pill argued: "Our scenarios illustrate how a stronger impulse to inflation may strengthen second-round effects. But I see the risk of second-round effects in each of these scenarios as skewed to the upside.
"A prompt but modest hike in Bank Rate will help mitigate risks to price stability."
The bank opted to publish three scenarios - A, B and C - rather than its traditional central forecast, due to the level of uncertainty surrounding the war. All assumed possible hikes, but analysts were more divided.
Andrew Wishart, economist at Berenberg, said: "Very different economic conditions to those that prevailed in 2022 suggest that rate hikes are unnecessary and that the BoE will eventually be able to resume cuts. Fiscal consolidation and a weak labour market should ensure that the UK does not deal with this inflation shock worse than its peers.
"As our baseline scenario, we expect the Strait of Hormuz to reopen soon. If so, inflation can fall below 2% in the second half of 2027, and the BoE can resume interest rate cuts in the fourth quarter."
But James Smith, developed markets economist, UK, at ING, said: "With every day that passes without the Strait of Hormuz reopening, the more likely it is that energy prices stay more elevated for longer. Our own inflation forecasts, peaking a touch above 4% this year, are higher than in the Bank's middle scenario.
"That's why, after today's decision, we're now edging towards a hike in June. It's certainly not guaranteed, but that's now narrowly our base case, having previously felt rates would stay on hold through this year."
James Flintoft, head of investment solutions at AJ Bell, said: "The vote confirms what the gilt market has been telling the bank for six weeks: the path of least resistance is towards tighter, not looser policy.
"The credibility cost of March is still being paid for in the gilt market. The MPC opened the door to an April hike last month, the market sprinted through it and the governor has spent the last fortnight trying to close it again. That doesn't feel like the rhythm of a central bank firmly in command of its own narrative."
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