Bank of England Holds at 3.75% as Two MPC Members Vote to Hike

The Bank of England kept its benchmark Bank Rate at 3.75% on June 18, 2026, after the Monetary Policy Committee voted 7-2 to hold. Two members, Megan Greene and Huw Pill, voted instead to raise the rate by 0.25 percentage points to 4%. It was the fourth meeting in a row at 3.75%. This article explains the decision using the Bank's published Monetary Policy Summary and minutes for the meeting that ended on June 17, what the committee said about inflation, energy, jobs and growth, and what it may mean for people with mortgages and savings. It is a summary of public information and is not financial advice.

The vote

The seven members who voted to hold were Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Catherine Mann, Dave Ramsden and Alan Taylor. Greene and Pill voted for an increase to 4%. A 7-2 split with the two dissents leaning towards tightening is a sign of where concern lies: not about weak demand, but about the possibility that higher energy costs keep inflation higher for longer. The Committee said it judged it appropriate to hold Bank Rate at the meeting and that it would monitor developments in the Middle East and their spread through the economy closely.

Inflation lower than expected

Consumer price inflation was 2.8% in May, the same as in April and down from 3.3% in March. The May figure came in 0.4 percentage points below the Bank's short-term forecast in its April Report. Looking ahead, and based on energy prices in mid-June, the Bank expects CPI to be a little under 3% in the third quarter of 2026 and a little over 3.25% in the fourth quarter. That path is lower than the one the Bank published in April, but it still has inflation above the 2% target through the end of the year.

Energy is the main driver

The Bank's summary gives specific numbers for the energy shock. Since the April Report, Brent crude averaged about $100 a barrel and UK wholesale gas 116 pence per therm, compared with about $66 and 87 pence before the conflict. Prices fell after a Middle East peace plan was announced, to around $79 a barrel and 100 pence per therm, and futures still slope downward. The energy regulator Ofgem's price cap for July to September rose 13.5%, or £221, to £1,862 a year for a typical household, which feeds into household bills and measured inflation with a lag.

The Committee said the policy response depends mainly on whether second-round effects emerge. Second-round effects occur when higher energy costs lead businesses to raise prices more widely and workers to push for higher pay, which can make inflation persistent even after energy prices fall.

The labour market and growth

The labour market is cooling gradually, according to the Bank. The Labour Force Survey unemployment rate fell to 4.9% in the three months to April. Employment rose 0.3% in that period, although underlying growth in employment is close to zero. Vacancies fell 2.6% in the three months to May, and private sector regular pay growth was 2.9%. The Committee sees the labour market loosening gradually, which would reduce pressure on wages.

On growth, GDP rose 0.6% in the first quarter of 2026, but business surveys suggest underlying momentum is weaker. Monthly GDP fell 0.1% in April, and the composite purchasing managers' index fell below 50 in May for the first time in more than a year, a level that indicates contraction. Bank staff estimate underlying growth of about 0.2% per quarter in the first and second quarters.

What the Committee said it will do

The Committee said it stands ready to act as necessary to ensure that CPI inflation returns to the 2% target sustainably in the medium term. It did not signal a direction. The minutes of the next meeting, ending on July 29, 2026, were scheduled for publication on July 30, 2026.

What it means for mortgage holders

A held Bank Rate means that lenders had no direct trigger to change the rates on tracker mortgages and standard variable rate products at this meeting. Fixed-rate mortgages are priced more on market expectations for future rates, which swap rates reflect, so they can move even when the Bank does nothing. With two members voting for an increase, markets might price a small chance of higher rates, which can keep fixed rates from falling. Homeowners whose fixed deals are ending can compare offers from their lender and from the wider market, and a mortgage broker can help check the full cost, including fees.

What it means for savers

When Bank Rate holds at 3.75%, easy-access and fixed savings rates are likely to stay around current levels, although banks set their own rates and may change them for competitive reasons. With inflation at 2.8%, savings accounts paying more than that earn a positive real return before tax. Savers can check the rate and whether it is a promotional rate that falls after a set period.

How to read a split vote

Votes of this kind are often read as a hint about the next move. Two members voting to raise rates do not mean a rise is coming, since the other seven judged a hold appropriate. However, when dissent leans one way, it suggests the balance of risks is shifting. A subsequent fall in oil and gas prices, as reflected in the Bank's more benign projections, could reduce that pressure, while a new energy shock could increase it.

What to watch next

Readers should watch monthly CPI releases, the labour market data on pay and unemployment, energy prices, and the Bank's next decision. The Bank of England publishes its decisions, minutes and reports on its website. This article summarises public statements and is not financial advice.