Bank of England rate decision February 2026
People walk along Bank Junction next to the Bank of England in the capital’s financial district in the City of London.
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The Bank of England kept interest rates on hold at 3.75% at its first meeting in 2026 on Thursday.
The central bank’s nine-member Monetary Policy Committee (MPC) Voted by a narrow 5-4 margin To put rates on hold. Four members voted to cut the benchmark interest rate, known as the “bank rate”, by 25 basis points. Economists polled by Reuters had expected the vote to be a clear cut 7-2.
BOE policymakers narrowly voted to cut interest rates in December, but economists had expected the central bank to hold rates steady in February, better than expected. monthly increase Figures and Constant inflation (up 3.4% in December), in the latest data.
The BOE said that inflation “will not only reach 2% but will be sustained at that level over the medium term, including balancing risks to achieve this.”
“Based on the current evidence, Bank Rate is likely to cut further,” he said, but decisions on further policy easing will be a close call.
“The extent and timing of further easing in monetary policy will depend on the evolution of the inflation outlook,” the statement said, although it added that inflation “will return to around the 2% target from April.”
pound sterling The dollar was trading at $1.356, down 0.6% against the data, according to the data.
What next?
Now, all eyes are on the upcoming inflation data and the timing and pace of rate cuts expected this year.
BoE Governor Andrew Bailey was among the MPC members who voted to keep rates on hold. “I expect a sharp decline in inflation in the coming months,” he said in a statement.
“Overall, inflationary risks appear to be continuing to ease. So I see scope for further policy easing. This does not mean that I expect a bank rate cut at any particular meeting. I will go into the coming meetings and ask if this cut is appropriate,” he said.
Here’s what economists expect from the central bank:
“There is no doubt that inflation will come down from here, and especially in the significant print of April,” Simon French, chief economist and head of research at Panmury Liberum, told CNBC on Thursday.
A narrower-than-expected MPC vote split crystallized the idea that the central bank would cut rates in the spring, French said.
“The timing of it, whether it’s the April 30 meeting or in June. I’m not sure, but it was definitely a more vicious stance in terms of the vote setup than the market expected,” he told CNBC’s “Decision Time.”
The BOE’s last rate cut in December came on the back of slowing growth, softening labor market data and A drop in inflation But the pace of consumer price inflation has been high, giving the bank pause, other economists noted.
“Early data for 2026 points to stronger-than-expected demand and stable inflation. Over time, fiscal tightening and slowing wage growth will ease additional price pressures, but not as much as we previously expected,” Andrew Wishart, senior UK economist at Berenberg, said in emailed comments.
Berenberg has ruled out three 25 basis-point cuts in 2026 by the BOE to begin in the second quarter; “We now expect further action at the April 30 meeting,” Wishart noted.
Edward Allenby, senior UK economist at Oxford Economics, agreed that while the MPC is divided so far, further rate cuts are on the way.
“The current bout of mild recession is likely to keep the Committee divided on the timing of these future cuts, encouraging a gradual increase in the outlook for further policy easing,” he noted in an emailed analysis.
“We see the April-end meeting as the most likely time for the next cut,” Allenby said.
“Until then, the MPC should take a clear view on wage awards and whether this is further evidence of slack in the economy,” he said.
Rob Wood, chief UK economist at Pantheon Macroeconomics, commented on Thursday: “We are currently sticking to our call for an April cut.”
Meanwhile, ICAEW director of economics Suren Thiru noted on Thursday that “rate-setters will likely opt for two interest rate cuts this year, possibly in April and July, with a third cut in their back pockets to deploy if the economy fares worse than the Bank’s forecast.”
Dani Stoilova, UK and Europe economist at BNP Paribas Markets 360, believes the first rate cut of 2026 could come before April, but could be a standalone trim.
“We expect the next rate cut in March. After that, we think the BOE will take a long pause before resuming policy normalization in early 2027 (we see a 3.00% terminal rate by mid-2027),” she said in emailed comments.
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