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.
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The Decision
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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.
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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.
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Market Reaction
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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.
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What Comes Next
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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.
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