BoE Holds Bank Rate at 3.75% Amid Falling Inflation and Middle-East Tensions

The Bank of England’s Monetary Policy Committee (MPC) met on Thursday, July 30, and voted 6-3 to keep the Bank Rate at 3.75%. The decision matches economists’ expectations after consumer-price inflation fell to 2.6% in the 12 months to June, down from 2.8% the month before. The rate has been unchanged since December, following four cuts in 2025.

Bank decision on interest rate looks 'nailed on' Oxford MailUsNews and World ReportEuronewsBank of England keeps key rate at 3.75% for the fifth time this year Bank of England expected to hold rates at 3.75% Thursday Bank of England Holds Rate in Hawkish Freeze, Vows to Meet Inflation Target The Independent

Inflation in the United Kingdom has been above the 2% target for 21 consecutive months, but the recent slowdown gave policymakers “breathing space” to assess the fallout from renewed fighting in Iran. The conflict has revived concerns that energy-price shocks could reignite price pressures. New Prime Minister Andy Burnham has pledged tax cuts on domestic electricity bills to shield consumers from rising costs.

UsNews and World Report

• Inflation: 2.6% in June (Office for National Statistics).

The Independent

• MPC vote: 6-3 to hold; dissenters Megan Greene, Huw Pill and Catherine Mann voted for a 0.25-point hike to 4%.

CNBC

• Oil market: Brent crude rose above $100 per barrel on July 23, later trading around $92 on the day of the BoE decision.

Euronews

• Currency: The pound edged up 0.08% to $1.3376 after the announcement.

British Pound Holds Steady Against Euro as Bank of England Leaves Interest Rate Unchanged

Governor Andrew Bailey emphasized a balance between “global conditions… and domestic conditions,” describing the hold as appropriate given the mixed outlook.

Oxford Mail

The U.S. Federal Reserve is scheduled to keep its key rate in a 3.5%-to-3.75% range on July 29, with Chair Kevin Warsh stating the Fed “will not hesitate to act” to maintain price stability.

Bank of England keeps key rate at 3.75% for the fifth time this year

• “A proactive hike in Bank Rate may reduce the probability that second-round effects set in,” — Megan Greene

CNBC

• “This was a slightly more hawkish Bank of England hold than expected,” — Felix Feather, economist at Aberdeen

CNBC

Holding the rate signals the BoE’s willingness to tolerate a modestly higher inflation path while avoiding premature tightening that could stifle growth. Mortgage lenders have already adjusted rates upward in anticipation of the decision, so the hold provides short-term stability for borrowers but leaves the prospect of higher borrowing costs later in the year. The oil price surge linked to the July 23 attacks in the Strait of Hormuz underscores the vulnerability of UK inflation to external energy shocks.

EYE NEWS UPDATE: Property industry reacts to Bank of England’s interest rate decision

The MPC will publish updated forecasts alongside the July 30 decision and reconvene in mid-September. The Bank’s baseline scenario projects inflation peaking around 3.2% later in 2026, with a risk of reaching 4.5% in 2027 if Middle-East tensions persist. Analysts expect at least one rate rise this year, and the market is pricing in a possible increase in September.

Bank of England expected to hold rates at 3.75% Thursday