Bank of England holds rates for now
Economists give their forecasts for when the next rate cut could take place in 2026.
TL;DR
- The Bank of England maintained its interest rate at 3.75% in its first meeting of 2026.
- The Monetary Policy Committee (MPC) voted 5-4 to hold rates, with four members favoring a 25 basis point reduction.
- Economists had expected a clearer 7-2 split vote.
- The BOE aims to ensure inflation sustainably reaches and remains at 2% in the medium term.
- The bank expects inflation to fall to around 2% from April.
- Further interest rate reductions are likely, but the timing and extent will depend on inflation outlook.
- Pound sterling weakened against the dollar following the announcement.
- Economists generally anticipate the first rate cut to occur in spring, with the April meeting being a likely candidate.
- Factors influencing future decisions include forthcoming inflation data, pay awards, and evidence of economic slack.
- Some economists suggest two rate cuts might occur in 2026, possibly in April and July.