Bank of England Keeps Bank Rate at 3.75% as Inflation Remains Above Target

The Bank of England kept the Bank Rate unchanged at 3.75% on July 29, underscoring the Monetary Policy Committee's challenge of dealing with inflation that is not yet back to target while growth remains subdued. The decision was split 6–3, with three members voting for a 25-basis-point increase to 4.00%. CPI inflation was 2.6% in June 2026, still above the Bank's 2% target. Policymakers pointed to energy costs as the main driver of the overshoot, with oil and gas prices pushed around by the ongoing conflict in the Middle East. Higher energy prices continue to filter through to household bills, transport costs and food prices. The committee said it is seeing "underlying disinflation," signalling that domestically generated price pressures are easing even as imported energy costs keep headline inflation elevated. Officials also flagged the risk of second-round effects, where energy-driven price increases feed into wage demands and broader pricing, potentially entrenching inflation. The Bank Rate peaked at 5.25% in 2023, and the move down has been gradual. Holding at 3.75% leaves policy notably looser than at the peak. The July vote represented a modest shift from June 2026, when the MPC voted 7–2 to hold. The change to 6–3 indicates one additional member moved toward a more hawkish stance. Governor Andrew Bailey addressed the decision at a noon BST press conference after the release of the July Monetary Policy Report. The Bank did not reference Bitcoin, stablecoins or other digital assets in its communications, but rate decisions still influence risk appetite across markets. Stable or lower rates tend to support riskier assets, while higher rates typically tighten liquidity and pressure speculative exposures. The next MPC meeting is scheduled for September 2026. By then, policymakers will have two more months of inflation readings, updated energy price forecasts and a clearer view of wage growth.