Bank of England Holds Rates at 3.75% pa

The Bank of England has kept interest rates at 3.75%, choosing not to raise borrowing costs this month.
This decision comes at a time of global uncertainty, particularly due to the conflict in Iran, which has pushed up energy and fuel prices.

Why the Bank Held Rates

Inflation has ticked up — but the rise is expected to be temporary

• Inflation rose slightly to 3.3% in March, mainly because fuel prices increased after the conflict began.
• The Bank expects inflation to stay a bit higher this year, but sees this as a short‑term effect, not a long‑term trend.

The UK economy is cooling naturally

• The labour market is softening
• Government spending is slowing
• There are no major supply shortages like we saw in 2022

These factors reduce the need for the Bank to raise rates right now.

Markets have been volatile

Only two months ago, markets expected rate cuts this year.
After the conflict began, they expected rate rises.
Today’s decision shows the Bank is taking a steady, wait‑and‑see approach.

What This Means for Homeowners and Buyers

Short‑term stability

The decision to hold rates:

• Removes the immediate risk of higher mortgage costs
• Helps support confidence in the housing market
• Comes at a time when buyer activity and new listings are already improving

Agents report that instructions are up 5%, and April saw solid levels of buyer interest.

But the outlook still depends on global events

The next two Bank of England meetings — 18 June and 30 July — will be important.
If energy prices rise further or inflation expectations increase, the Bank may consider a rate rise later in the summer.

What to Expect Over the Coming Months

June: low risk of change

The recent moderation in underlying inflation should keep most policymakers comfortable with holding rates.

July: the next “live” meeting

By then, the Bank will have:

• More data on how the energy shock is feeding through
• Updated forecasts
• A clearer picture of inflation expectations

Unless inflation rises sharply, many economists expect rates to stay on hold for the rest of the year.

Comment

• Rates remain at 3.75%
• No immediate increase in borrowing costs
• Housing market remains resilient
• Future decisions depend heavily on global energy prices and inflation data

For now, the Bank’s decision gives households and the property market breathing room, even though uncertainty hasn’t disappeared entirely.