The Bank of England kept borrowing costs at 3.75% on June 18, as policymakers warned that energy prices still posed an inflation risk.
The Monetary Policy Committee voted 7-2 to hold Bank Rate, according to current reporting. Huw Pill and Megan Greene voted to raise the rate to 4%.
Governor Andrew Bailey said recent oil-price falls were encouraging. However, he said earlier energy price rises had already put inflationary pressure on the economy.
The Bank said oil prices remained above pre-conflict levels and had stayed volatile. It said future policy would depend on the scale and duration of the energy shock.
The committee now expects UK inflation to reach 3.25% in the final quarter of 2026. That remains above the Bank’s 2% target.
The Office for National Statistics said the Consumer Prices Index inflation rate remained at 2.8% in May. Transport costs pushed inflation upward, while food and non-alcoholic drinks partly offset the increase.
Read: UK Unemployment Rate Hits 5.2% as Wage Growth Slows
Ofgem’s price cap will raise household energy bills by 13% in July. The Bank said delayed wholesale energy costs could still feed into domestic gas and electricity prices.
The Bank’s next Monetary Policy Committee meeting is due at the end of July. Policymakers are expected to assess whether the US-Iran peace deal eases pressure on oil and gas supplies.
Moneyfacts data showed the average two-year fixed mortgage rate at 5.59%. The average five-year fixed deal stood at 5.57%.
