The Bank of England decided to keep the interest rate unchanged at 3.75% during its April 2026 meeting, by a majority of 8 votes to 1, with one member preferring to raise the rate to 4%.
Policymakers noted that tensions in the Middle East have created significant uncertainty regarding global energy prices, while emphasizing that monetary policy cannot directly influence these factors. Instead, the committee is focused on ensuring that any inflationary pressures are transmitted in line with the 2% inflation target over the medium term, with the outcome depending on the magnitude and duration of the shock and how it is transmitted to the economy.
The inflation rate, as measured by the Consumer Price Index, rose to 3.3%, and is expected to continue rising later this year as the impact of energy costs shifts in, increasing the risk of secondary inflationary effects on wages and prices.
Conversely, a slowing labor market and weak economic growth may help contain inflationary pressures, and tighter financial conditions since the start of the tensions are likely to limit demand.