UK Interest Rate Held at 3.75%
We give our thoughts on today’s decision to hold UK interest rates exclusively to our website.
30 April 2026
At 12:00 today, The Bank of England today again held the UK Base Rate at 3.75%. The vote of the nine person Monetary Policy Committee was 8-1, with only Chief Economist Huw Pill voting for a 0.25% rise. These votes were as expected, and a complete change from the March position where some members considered cuts. There is further information on this at https://www.bbc.co.uk/news/live/cpwjw9dg2vjt whose chart we have used.
The cause is of course the Iran War, and the expected inflation increase which follows increased oil prices. The rate published on 22 April was 3.4%, only 0.1% above March’s 3.3%, but it is in nature of rolling 12-month inflation figures that the effects are felt gradually. The Bank of course is trying to get ahead of this.
In his press conference at 12:30, Governor Andrew Bailey stressed the volatility of the situation, making it difficult to make predictions. He did however forecast that if the situation continues, household energy bills could rise by 15%. He pointed out that oil prices not only react to “what’s going on in the Gulf” but to “what’s being said about what’s going on in the Gulf”, a not-so oblique reference to President Trump.
Markets hardly moved on the rate announcement or the press conference with the pound moving 0.1% against the dollar and even less against the euro, which was quickly reversed anyway. Similarly the FTSE100, already up 1.7% today on other news did not move. UK 10-year government bond yields actually moved down 6 points (a 1% drop), although they had hit a 1 month high last night.
The MHW View
Another month of war, and another delay in the longer term trend to cut rates. As we said last month “the whole trajectory for further rate cuts is on hold until there is some resolution in the Middle East.” Stock markets are up since the last rate decision in March, and we repeat what we said in March, that governments are very motivated to keep inflation down. There is nothing new to worry about today. The next rate decision is on 11 June 2026.
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