Bank of England Holds Interest Rate at 3.75% in February 2026 Decision

The Bank of England's Monetary Policy Committee voted on February 4, 2026, to maintain the Bank Rate at 3.75%. The decision was reached by a narrow margin of 5-4, with four members advocating for a quarter-point reduction to 3.5%. The committee cited ongoing progress in reducing inflation, which had declined from 3.8% in September 2025 to 3.4% by December 2025, with projections indicating a return to the 2% target around April 2026. This anticipated decrease is largely attributed to changes in energy prices, including measures from Budget 2025. Committee members expressed differing views on the persistence of inflationary pressures versus risks from weaker economic demand. Those supporting the hold emphasized concerns about wage growth and services price inflation remaining above target levels, while those favoring a cut pointed to diminishing inflation risks and the need to address economic slack. The labor market showed signs of loosening, with unemployment rising slightly above 5%. The committee noted that monetary policy had become less restrictive following previous rate reductions totaling 150 basis points since August 2024. Further easing was considered likely but dependent on evolving inflation trends. Members present included Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann, Huw Pill, Sarah Breeden, Swati Dhingra, Dave Ramsden, and Alan Taylor.