Bank of England holds key rate at 3.75% in fifth meeting

The Bank of England held its key interest rate at 3.75% on Thursday, July 30, 2026, marking the fifth consecutive meeting with no change as policymakers balance easing inflation against renewed geopolitical risks. The Monetary Policy Committee voted 6-3 to maintain the rate, with Governor Andrew Bailey among the majority. Chief Economist Huw Pill and external members Megan Greene and Catherine Mann dissented, favoring an increase to 4%.

Officials pointed to recent data showing inflation fell to 2.6% in June, offering some relief and allowing for a pause in tightening. However, the Bank warned that inflation is expected to rise again later this year, potentially peaking around 3.2% in October and November, before falling back toward the 2% target by the end of 2027. The primary risk stems from the ongoing conflict in the Middle East, which has caused high and volatile energy prices. Governor Bailey stated that while inflation has fallen faster than expected, the conflict means prices will increase again. He emphasized the Bank's role is to ensure any such increase remains temporary.

The decision underscores a cautious approach amid conflicting economic signals. While inflation...