The Bank of England has left its key interest rate unchanged at 3.75%, keeping borrowing costs steady as a sustained jump in global energy prices threatens to push inflation back up later this year.

The decision was taken at the Monetary Policy Committee (MPC) meeting that ended on 29 July 2026 and published on 30 July. It leaves Bank Rate at the level it first reached in December 2025 — but the vote was far from unanimous, and the split points to a Committee growing uneasy about what comes next.

Updated 16 August 2026: Bank Rate remains at 3.75%. In the fortnight since the decision, oil and gas prices have climbed further rather than settling, which has hardened the argument the three dissenting members were already making. The next moving parts are July’s inflation figures on 19 August and the MPC announcement on 17 September.

The key numbers at a glance

Bank Rate 3.75% (unchanged since December 2025)
MPC vote 6–3 in favour of holding
CPI inflation (June 2026) 2.6%
Inflation target 2%
Brent crude (28 July close, at the decision) $84 a barrel
Brent crude (mid-August 2026) Around $88–90 a barrel
UK natural gas (28 July close, at the decision) 136 pence a therm
UK natural gas (15 August 2026) Around 151 pence a therm
July CPI release Wednesday 19 August 2026
Next rate decision Thursday 17 September 2026

A 6–3 split, with three votes for a rise

Six members voted to keep Bank Rate at 3.75%: Governor Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden and Alan Taylor.

Three voted against — Megan Greene, Catherine L Mann and Huw Pill — each preferring an immediate quarter-point increase to 4%.

The minority argued that moving early would reduce the probability of so-called second-round effects, where a one-off jump in energy costs feeds through into wider price and wage setting and becomes self-sustaining. In their view, setting policy as though those effects were stronger and correcting course later would prove less costly than doing the reverse. They also argued that a rise now would cut through the noise in commodity and asset prices and send an unambiguous signal about the Bank’s willingness to tackle upside risks to inflation.

That was the fifth meeting in a row at which Bank Rate was left alone, and the vote split is the clearest signal yet that the Committee’s patience is finite.

Why energy prices are driving the decision

The dominant source of uncertainty, the Committee said, remains the conflict in the Middle East and its effect on energy markets. The disruption to the transport and supply of oil and gas has raised prices and pushed up both motor fuel costs and household utility bills.

As at the close of business on 28 July, the Brent crude front-month future stood at $84 a barrel and the UK front-month natural gas future at 136 pence a therm — both materially higher than before the conflict began. In June’s CPI reading, motor fuel prices alone contributed 0.6 percentage points. For background on how crude markets are priced and what moves them, see our explainer on what crude oil is and how it is priced.

What has happened to energy prices since the decision

The Committee’s central hope was that energy markets would settle. So far they have not. Brent has traded in an unusually wide band this year — spiking above $100 a barrel in late July as ceasefire talks broke down, then easing back — and by mid-August it was changing hands at roughly $88 to $90 a barrel, several dollars above the level assumed in the July Monetary Policy Report.

UK wholesale gas has moved further still. The front-month contract was around 151 pence a therm on 15 August 2026, up from the 136 pence used in the Bank’s July projections and close to double the level of a year earlier. Winter 2026 delivery has been trading at similar levels, which matters because that is the period Ofgem’s price cap calculations will draw on.

The supply picture behind those prices remains fragile. The International Energy Agency’s August report put global oil supply at 101.5 million barrels a day in July — a recovery on the month, but still well below year-earlier levels, with a large share of Gulf output shut in. Damage to LNG facilities in Qatar is also expected to hold back global gas supply growth for years rather than months, which is why the gas curve has not fallen back the way the oil curve has.

For households, the practical read-across is that the energy-driven leg of inflation the Bank expected in the autumn now looks more likely to arrive than to fade.

Inflation has fallen — but the Bank expects it to climb again

CPI inflation has fallen to 2.6%, further than the Bank had expected. That is still above the 2% target, and policymakers expect it to rise later in the year as higher energy costs continue to pass through the economy.

The Committee said there is little evidence so far of material second-round effects, and that recent data has shown clear signs of underlying disinflation. A loose labour market — with more people looking for work than there are jobs available — should also limit how much employers raise pay, helping contain the wider inflationary impact.

July’s CPI figures are published by the Office for National Statistics on Wednesday 19 August 2026. That release is the single most important piece of evidence between now and the September meeting: it is the first reading that will capture much of the summer’s fuel-price increase, and it will show whether services inflation and pay pressure are still cooling underneath the energy headline.

Today, we’ve held Bank Rate at 3.75%. Inflation has fallen faster than we’d expected, but the conflict in the Middle East continues to mean high and volatile energy prices. That will cause inflation to rise again later this year. However the conflict unfolds, our job is to make sure any increase in inflation is temporary and that it comes back to our 2% target.Andrew Bailey, Governor of the Bank of England

The labour market is doing some of the Bank’s work

The counterweight to higher energy costs is a jobs market that has clearly loosened. The unemployment rate has risen to around 4.9%, with roughly 1.76 million people out of work — some 81,000 more than a year earlier — while the employment rate for 16 to 64 year olds has edged down to about 75.1%.

Pay growth has slowed alongside it. In the three months to May 2026, average weekly earnings excluding bonuses were up around 3.4% on the year, with total pay including bonuses up about 4.3%. Those are rates the Bank has previously described as broadly consistent with the 2% target once productivity is taken into account — which is precisely why the majority felt able to wait rather than raise rates in July.

The hawks’ worry is that a fresh energy shock lands on top of pay settlements that have not yet been negotiated for next year. That is the mechanism the phrase “second-round effects” describes, and it is why the September vote is likely to hinge on wage and services data as much as on the oil price.

What it means for mortgages and borrowing

Bank Rate is the interest rate the Bank of England pays commercial banks, and it feeds through to what lenders charge customers. Tracker and most standard variable rate mortgages move with it directly, so a hold means no automatic change for those borrowers this month. Fixed-rate deals are priced off market expectations for where rates are heading rather than today’s level, which is why they can move even when Bank Rate does not.

That distinction matters more than usual right now. Because markets have shifted from expecting cuts to pricing in the possibility of increases, swap rates have firmed and several lenders have repriced fixed deals upwards even though Bank Rate itself has not moved since December 2025. If you are within six months of the end of a fix, it is worth securing a rate you can fall back on while continuing to shop around, since most offers can be swapped if pricing improves before completion.

The Committee noted that mortgage rates for households and borrowing costs for firms are already higher than they were before the conflict, and that this is making people more cautious about spending — one of the forces expected to pull inflation back down over time. Anyone weighing short-term secured borrowing may find our guide to bridging loan interest rates in the UK a useful comparison point.

What it means for savers

Savings rates broadly track Bank Rate, so a hold means the recent easing in returns is likely to pause rather than reverse. With inflation at 2.6%, any account paying less than that is still losing purchasing power in real terms, which makes shopping around more valuable than usual. Our guide on how to save more money with smart financial choices covers how to structure savings when rates are moving.

One practical consequence of the changed rate outlook: locking money away in a long fixed-term bond is less obviously the right call than it was when cuts looked certain. Splitting savings between an easy-access account and a shorter fixed term keeps some flexibility if rates do drift higher into 2027.

What happens next

The Committee judged that the risks to the inflation outlook are tilted to the upside relative to its central projection in the July Monetary Policy Report, while stressing that the picture could still change materially as events in the Middle East unfold. It said it stands ready to act as necessary to keep CPI inflation on track to meet the 2% target in the medium term.

The next announcement is due on Thursday 17 September 2026. With three members already voting for a rise, that meeting is likely to turn on whether energy prices have stabilised and whether any evidence of second-round effects has begun to appear in the data.

Market pricing has moved with the energy story. Having spent the first half of the year expecting further cuts, money markets now lean towards Bank Rate being higher rather than lower over the next 18 months, with implied pricing pointing to something in the region of 4% to 4.25% by the second half of 2027. Only a small fraction of a quarter-point move is priced for September itself, however — the market’s base case is still a hold, with the argument being about 2027 rather than next month. Surveys of economists likewise cluster around Bank Rate finishing 2026 at 3.75%.

Three things to watch before 17 September: the July CPI print on 19 August, the August labour market release, and whether the Brent and UK gas curves settle or push higher again.

Frequently asked questions

What is the current Bank of England base rate?

Bank Rate is 3.75%, and it remains at that level as of 16 August 2026. It was held there at the MPC meeting ending 29 July 2026, having been reduced from 5.25% in August 2024 down to 3.75% by December 2025.

Why did the Bank not cut rates again?

Inflation is still above the 2% target at 2.6%, and the Bank expects it to rise later this year as higher energy costs pass through. Policymakers judged that current rates are at about the right level to bring inflation back to target in the medium term.

Who voted for an interest rate rise?

Megan Greene, Catherine L Mann and Huw Pill voted to increase Bank Rate by 0.25 percentage points to 4%. They were outvoted 6–3.

When is the next interest rate decision?

Thursday 17 September 2026. Before that, July’s CPI inflation figures are published on Wednesday 19 August 2026.

Could the Bank of England raise rates in 2026?

It is possible but not the market’s base case. Three of nine MPC members already voted for a rise in July, and money-market pricing now tilts towards higher rates over the next 18 months rather than lower ones. Most economists surveyed, though, still expect Bank Rate to end 2026 at 3.75%. A rise would become considerably more likely if energy costs stay elevated and pay growth stops slowing.

Will my mortgage payments change?

If you are on a fixed-rate deal, nothing changes until your fix ends. If you are on a tracker or standard variable rate, a hold means no automatic change from this decision, though lenders can still adjust their own variable rates independently. Fixed-rate pricing can still move in the meantime, because it follows market expectations rather than today’s Bank Rate.

Sources

For the wider picture behind this decision, from the IMF’s crosscurrents of war and technology to the numbers that are actually confirmed for 2026, our full 2026 financial update pulls the global and UK data into one place.