Bank of England holds base rate at 3.75%

The Bank of England has kept its base interest rate unchanged at 3.75%, as policymakers continue to balance easing inflation with a growing number of global risks.

The decision, taken by the Bank’s Monetary Policy Committee (MPC), reflects a cautious approach at a time when inflation remains above the Government’s 2% target and the wider economic outlook has become more uncertain. 

Why has the rate been held?

At its simplest, the base rate is the Bank’s main tool for controlling inflation. It influences how much it costs to borrow and the returns available to savers across the UK. 

While inflation has eased from previous highs, it remains above target and the Bank has signalled that it wants clearer evidence that price growth will fall back to, and remain at, 2% before making further changes. 

More recently, global events have added further uncertainty. Rising oil and gas prices, linked to geopolitical tensions in the Middle East, have increased the risk that inflation could remain higher for longer. 

As a result, expectations of an immediate rate cut have been pushed back, with the Bank opting instead for stability while it monitors how these pressures develop.

What does this mean for households?

For many households, a hold in the base rate brings a degree of short-term stability, although the wider picture remains mixed.

Mortgage holders: Those on tracker or variable rate mortgages are unlikely to see immediate changes to their monthly repayments. However, borrowing costs remain higher than in recent years, and future reductions may take longer than previously expected.

Fixed-rate borrowers: Fixed deals are unaffected in the short term, but future mortgage pricing will continue to reflect expectations around inflation and interest rates.

Savers: Savings rates are likely to remain relatively steady for now, meaning continued, albeit modest, returns.

Cost of living: With inflation still above target and energy prices rising again, household budgets may remain under pressure in the months ahead.

A balanced and cautious approach

In holding the base rate at 3.75%, the Bank of England is signalling a careful and measured stance. While progress has been made in bringing inflation down, the Bank is prioritising long-term stability over short-term change.

As ever, interest rate decisions are finely balanced, and future movements will depend on how inflation, economic growth and global events evolve in the months ahead.

Sources:
https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
https://www.moneysavingexpert.com/news/2026/02/base-rate-held/