Bank of England Holds Rate at 3.75%, Warns on Inflation and Energy Uncertainty

Bank of England Governor Andrew Bailey defended the decision to hold interest rates at 3.75% in June 2026, citing encouraging but incomplete progress on inflation and energy prices. Despite a ceasefire in the Middle East reducing oil costs, energy prices remain above pre-conflict levels and inflation has not yet returned to the 2% target. Bailey noted the economy has softened, providing a backdrop for caution. He declined to comment on political instability or the by-election, but stressed the importance of stability. Regarding deepfake videos depicting him fighting Nigel Farage, Bailey condemned them as attempted fraud and called for information on those responsible. On the tenth anniversary of the Brexit vote, Bailey stated that leaving the EU has lowered UK growth and productivity by reducing export markets, but the City of London has fared better than many predicted, thanks to efforts to maintain its status as a financial centre.