General view of the Bank of England and the Bank of England’s Prudential Regulation Authority (PRA) in March 2025.
Vuk Valcic | SOPA Images | Lightrocket | Getty Images
The Bank of England has left its key interest rate unchanged at 3.75%, in line with economists’ expectations.
The U.K. central bank’s rates-setting Monetary Policy Committee voted by a 6-3 split to keep the benchmark rate, officially known as Bank Rate, unchanged.
Committee members Megan Greene, Huw Pill and Catherine Mann were the dissenting voices, voting for a 25 basis point hike.
The BoE said all members agreed that risks to the paths of energy prices remained skewed to the upside.
A hold had been widely anticipated after headline U.K. inflation fell to 2.6% in June, a 15-month low.
But Greene said inflation has remained above target for about five years, adding that additional supply risks, including a second energy chokepoint in the Red Sea and AI-related hardware supply constraints, are now weighing on markets.
“A proactive hike in Bank Rate may reduce the probability that second-round effects set in,” Greene said.
Pill warned that “profound uncertainty surrounding the energy price outlook is likely to be prolonged and of unknown duration, rendering efforts to fine-tune the economy with monetary policy hazardous.”
“As a result, it is appropriate to raise Bank Rate now, thereby cutting through noise in commodity and asset price developments to offer a clear and unambiguous signal of our willingness and ability to address upside risks to inflation stemming from events in the Gulf,” he added. “This would place us in the best position to manage risks to the inflation target as they emerge.”
