Bank of England Holds Rates at 3.75%, Rate Rise Possible by Year End

At its June meeting, the Monetary Policy Committee (MPC) voted by a majority of 7–2 to maintain Bank Rate at 3.75%. However, the vote split reveals growing concern: two members voted to increase Bank Rate by 0.25 percentage points, to 4%.

The central tension is inflation versus economic weakness. Inflation (2.8% in May 2026) will probably rise this year due to higher energy costs, but the economy looked less susceptible to demands for higher wages or companies pushing up prices than after Russia's full-scale invasion of Ukraine. Markets remain split: based on SONIA futures pricing as of mid-July, the market-implied probability of no change at 30 July is around 86%, with a rise to 4.00% implied at approximately 14%.

The 30 July decision is critical because it will be accompanied by a full Monetary Policy Report with updated forecasts. The rate decision, an updated Monetary Policy Report and a Governor's press conference all land on the same day, meaning the MPC has to show its hand on the trajectory even if the rate itself does not move. A hold accompanied by an upgraded inflation forecast would send a different signal than a hold accompanied by a downgraded one.

What this means for expats: Tracker mortgage holders should prepare for possible rate rises. On an interest-only £200,000 mortgage, a 0.25 percentage point rise to 4.00% would add approximately £42 per month in interest, though for repayment mortgages, the increase depends on the remaining term and the lender's rate. If you are planning to move house or renew a fixed-rate mortgage in the autumn, lock in rates now while they remain near current levels.

Sources

• Bank of England — Interest rates and Bank Rate
• Cambridge Currencies — Bank of England Base Rate Next Interest Rate Decision 2026