economy

February 5, 2026

Bank of England holds rates for now

Economists give their forecasts for when the next rate cut could take place in 2026.

Bank of England holds rates for now

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.

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