Bank of England holds rates steady as inflation climbs to 3.3% in 2026

The Bank of England has held interest rates steady at 3.75% after a vote by the Monetary Policy Committee (MPC). The decision comes as inflation climbed to 3.3% in March 2026, raising concerns about future price pressures. Financial firms still face risks from tighter credit conditions and weaker demand across the economy.

The MPC voted 8-1 to keep rates unchanged, signalling caution amid economic uncertainty. In its latest report, the committee outlined three possible scenarios for inflation. These ranged from energy prices following current market trends to more severe shocks with lasting inflationary effects.

The Bank warned that inflation could rise further later this year if energy costs keep climbing. However, tighter financial conditions since the start of recent conflicts may help ease price growth over time. The MPC also highlighted risks from a cooling labour market, slower wage growth, and reduced economic activity—factors that could limit inflationary pressures. One key concern remains whether the energy shock will trigger broader wage and price increases. Melanie Spencer, growth director at Target Group, noted the complexity of the current economic landscape and the challenges behind the Bank’s decision.

With inflation at 3.3% and risks from energy prices still looming, the Bank of England has chosen to maintain rates for now. Financial firms continue to navigate tighter conditions, while the MPC monitors whether inflation will persist or ease in the coming months. The next steps will depend on how energy costs and wage trends develop.