Bank of England holds rate at 3.75% amid Middle East energy uncertainty

The Bank of England's Monetary Policy Committee voted 7-2 to maintain Bank Rate at 3.75% at its June 2026 meeting, with Megan Greene and Huw Pill dissenting in favor of a 0.25 percentage point increase to 4%. The decision comes as global energy prices have fallen since the previous meeting following progress on a Middle East peace deal, but remain volatile and above pre-conflict levels. CPI inflation stood at 2.8% in May, unchanged from April, and is expected to rise later this year due to energy price pass-through. The Committee noted that the labour market continues to loosen and economic activity remains subdued, with GDP growth of 0.6% in Q1 2026 but underlying momentum weak. Members judged that the tightening in financial conditions since the conflict—with two-year OIS rates around 70 basis points above pre-war levels and mortgage rates 80 basis points higher—is already restraining the economy. The majority saw holding rates as appropriate while monitoring second-round effects, though some members expressed concern about elevated household inflation expectations and asymmetric risks. The next MPC meeting is scheduled for 30 July 2026.