The Bank of England's Monetary Policy Committee voted 6-3 to hold interest rates at 4.25% at its April 2026 meeting, citing persistent services inflation and uncertainty in global trade as reasons for caution.
The Decision
The three dissenters — Deputy Governor Sarah Breeden and external members Swati Dhingra and Alan Taylor — voted for an immediate cut to 4.0%, arguing that the economy was weakening faster than the central forecast suggested.
Governor Andrew Bailey indicated that the committee was "increasingly comfortable" with the inflation outlook but needed further evidence of sustained progress before acting. Services inflation remains at 4.1%, comfortably above the level consistent with the 2% CPI target.
Market Reaction
Markets had priced in approximately a 40% probability of a cut at this meeting. Sterling rose marginally on the hold decision. Two-year gilt yields fell slightly as markets pushed their expectation of the next cut into June.
What Comes Next
The Bank's next decision is at the June meeting, where a cut looks more likely. The OBR's latest forecast, published last month, projected two further cuts in 2026, bringing the base rate to 3.75% by year end. Several analysts now think this may prove too aggressive.
