Bank of England holds interest rates steady amid inflation fears and energy cost pressures
The Bank of England has held its base interest rate at 3.75% for the second month in a row. The decision follows a vote by the Monetary Policy Committee (MPC), where eight members backed the move while one opposed it. Inflation concerns remain high as energy costs continue to push prices upward. Inflation reached 3.3% in March 2026, prompting the MPC to assess future risks carefully. The committee outlined three possible scenarios in its latest report. One assumes energy prices will follow market trends, while another warns of stronger inflation if energy shocks persist.
The MPC also highlighted a loosening job market, slower wage growth, and weaker economic activity as factors that could ease inflationary pressures. However, the main worry remains whether rising energy costs will trigger further wage and price increases. Tighter financial conditions since the conflict began may help reduce inflation over time, but risks remain.
Financial services firms face challenges from weaker demand, slower consumer spending, and stricter financial conditions. Melanie Spencer, growth director at Target Group, shared her views on the Bank’s decision, though no specific details were provided. The Bank of England’s decision keeps borrowing costs steady for now. Inflation is expected to rise further if energy prices stay high. The MPC will continue monitoring economic conditions to determine future rate adjustments.
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