Current Bank Rate 3.75%
Next due: 18 June 2026
Current inflation rate 3.3%
Target: 2%
War in the Middle East has led to energy price rises
Inflation has risen to 3.3% and we expect it to rise further this year
Whatever happens, we will make sure that inflation returns to the 2% target
Published on 30 April 2026
The Monetary Policy Committee is responsible for maintaining monetary stability by keeping inflation low and stable. It meets eight times a year to decide what Bank Rate is needed to return inflation to – or keep it at – the 2% target over time.
Key points:
- we have held Bank Rate at 3.75%
- war in the Middle East is disrupting the transportation and supply of energy, raising its price and pushing up households’ motor fuel costs; we expect utility bills to increase as well
- inflation has risen to 3.3% – higher than we predicted in February, before the start of the war; it is likely that it will be higher later this year
- we expect energy price rises to have knock-on effects; as businesses’ bills go up, it is likely they will increase their own prices to cover the cost; workers may ask for higher wages as their bills also rise
- the impact on the economy and inflation will depend on how much energy prices go up and how long they stay raised; it will also depend on how much pressure businesses feel to increase wages and prices
- monetary policy cannot affect global energy prices; our job is to make sure that higher inflation does not persist and have long-lasting effects on the economy
- we are monitoring the situation very closely; whatever happens, we’ll make sure that inflation gets back to the target in the medium term
Find out more
What are interest rates?
Interest is what you pay for borrowing money and what banks pay you for saving money with them.
If you are borrowing money, the interest rate (or lending rate) is the amount you are charged for doing so. If you are a saver, the interest rate (or savings rate) tells you how much money will be paid into your account.
Both are expressed as a percentage of the total amount you have borrowed or saved.
So, if you borrowed £100 with a 1% lending rate, you’d have to pay £101 a year later. If you put £100 into a savings account with a 1% interest rate, you’d have £101 a year later.
What is Bank Rate?
It is the core interest rate in the UK and it is our job to set it.
It is the rate of interest we pay to commercial banks, building societies and financial institutions that hold money with us. It is also the rate we charge on loans we may make to them. It, therefore, affects their own lending and savings rates. For example, when we raise the Bank Rate, banks will usually increase how much they charge their customers on loans and the interest they offer on savings. And the reverse if we lower it.
Bank Rate over time
Official Bank Rate history data from 1694How do interest rates affect inflation?
Interest rates influence how much people spend, and that affects how shops and businesses set their prices.
Higher interest rates mean higher payments on many mortgages and loans, meaning people must spend more on them and less on other things. Saving becomes more attractive because the returns are higher and it becomes more expensive to take out a loan. These things all discourage consumers and businesses from spending.
When customers spend less, businesses are less willing or able to raise their prices. When prices don’t go up so quickly, inflation falls.
Lower interest rates can have the reverse effect. If payments on mortgages and loans go down, people will have more money to spend on other things. Savers will get a smaller return and, therefore, may feel less motivated to put their money away. It will be also cheaper for potential borrowers to take out a loan – and use that money to make big purchases.
All of these factors encourage spending. When people spend more, this means demand is high. And when demand is high, businesses often raise their prices, pushing up inflation.
Monetary Policy Committee announcements
This page was last updated 30 April 2026