At its meeting yesterday, the Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 7-2 to maintain the Bank Rate at 3.75% for the fourth time in a row.
Two members, Megan Greene and Huw Pill, voted to increase the Bank Rate by 0.25 percentage points, to 4%. In the previous meeting in April, Huw Pill was the only MPC member to vote for an increase, and his repeated vote at the June meeting reflected a call for “prompt but modest action” on the rate now, to ensure the policy is “well-placed to address the significant uncertainties” facing the committee. Meanwhile, Dave Ramsden, one of those who voted to hold the rate, says that doing so “keeps options open” amid ongoing uncertainty in the Middle East.
The CPI inflation rate remains above target at 2.8%, but has not risen as sharply as many had feared given the upheaval caused to economies across the world by the US-Israel war with Iran. This suggests that fuel price rises have, at least so far, not fed through more broadly into the UK economy. In April, the Bank of England had expected inflation to rise to 3.6% this year, but now forecasts a peak of 3.25%.
Global energy prices have fallen since the previous meeting in response to events in the Middle East. But they remain higher than pre-conflict and have continued to be volatile. The impact of the energy shock on the UK economy remains uncertain, with Bank of England governor Andrew Bailey stating that “Whatever happens in the future, the higher energy prices of the past four months mean there’s already some inflationary pressure in the pipeline.”
The Bank of England’s cautious “wait and see” approach is broadly mirrored by other major central banks, including the US Federal Reserve and the European Central Bank, both of which left rates unchanged at their most recent meetings in June.
For more details, you can get the Monetary Policy Summary and minutes of the MPC meeting from the Bank’s website at https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2026/june-2026 or request this from MTA.