What is the Bank of England's expected interest rate decision on Thursday, and what is the main reason cited for holding rates steady?

The Bank of England is expected to keep its benchmark interest rate unchanged at 3.75% — its level since December — with most economists polled by Reuters forecasting a 7-2 vote to hold. The main reason cited is that current oil prices and recent economic data do not warrant an immediate rate hike or overly hawkish communication, as inflation has fallen to a 15-month low of 2.6% in June and wage growth weakened to 2.9%, the weakest since 2020; additionally, the BoE lowered its peak inflation forecast for the year to just over 3.25% from 3.6%–3.7% previously, aided by factors including the electricity tax cut and persistently weak labour market conditions.

How does the Bank of England's current stance on interest rates compare with recent actions by the U.S. Federal Reserve and the European Central Bank?

Unlike the European Central Bank, which raised rates in June, and the U.S. Federal Reserve — which left rates unchanged but saw three of twelve FOMC members advocate for a quarter-point hike while Chair Kevin Warsh expressed 'no tolerance' for inflation — the Bank of England is signalling continued restraint, maintaining its March position that previously expected rate cuts are off the table due to geopolitical risks (e.g., the Iran war closing the Strait of Hormuz), yet still judging current conditions insufficient to justify a hike, with most MPC members viewing existing rates as sufficient to gradually lower inflation amid weak wage growth and falling energy bill inflation.

Bank of England to Keep Rates Steady While Oil Prices Gyrate

Jul 29, 2026

The Bank of England is set to hold interest rates steady at 3.75% amidst inflation concerns driven by volatile oil and natural gas prices. Economists predict a 7-2 vote to maintain current levels while monitoring energy market impacts.

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