Bank of England Delivers Hawkish Hold at 3.75% as Three Members Vote to Hike

The Bank of England kept its benchmark Bank Rate unchanged at 3.75% at its late-July meeting, holding for a fifth consecutive time in a widely expected decision. The Monetary Policy Committee voted 6-3 to keep rates steady, but the split drew attention because support for an increase to 4% rose to three members, up from two previously, reflecting growing concern that higher energy prices could make inflation more persistent. Analysts labelled the outcome a hawkish hold, though Governor Andrew Bailey did not signal that an increase was imminent. Headline inflation fell more than expected to 2.6% in June, but volatile energy costs and continued uncertainty tied to the Middle East conflict could renew upward pressure. Expectations have shifted markedly since the conflict began: markets that once anticipated two rate cuts in 2026 are now weighing the possibility of rises. Because swap rates, which reflect expectations for future interest rates, are the main benchmark for pricing fixed-rate mortgages, the hawkish signal feeds directly into borrowing costs. The Bank's next decision is scheduled for 17 September.