The Bank of England's Monetary Policy Committee voted to maintain the Bank Rate at 3.75% at its July 2026 meeting, in line with market expectations. The previous rate was also 3.75%.

The vote split was 0–6–3 (cut–hold–hike), compared with the 0–7–2 outcome that had been expected. Megan Greene, Huw Pill, and Catherine Mann dissented, each voting for a 25 basis point rate increase.

In its policy statement, the Committee acknowledged that the impact of the energy shock on the UK economy remains uncertain. It reiterated that monetary policy cannot directly influence energy prices, and that the stance needed to sustainably achieve the 2% inflation target depends on the scale and duration of that shock. This dynamic — a supply-side price shock that central banks cannot address through demand management alone — has been a recurring feature of the post-2022 inflation landscape across major economies.

While the risk of material second-round effects — where initial price increases feed into wage demands and broader price-setting behaviour — increases the longer elevated energy prices persist, the Committee noted there is little evidence so far of such effects, particularly based on recent data. Risks to the inflation outlook remain tilted to the upside relative to the central projection, though the outlook could shift materially depending on how events in the Middle East unfold.

The Committee judged it appropriate to hold the Bank Rate at this meeting and reaffirmed that it stands ready to act as necessary to keep inflation on track to meet the 2% target over the medium term.

Full statement: Bank of England – July 2026 Monetary Policy Summary

In the accompanying discussion, all members agreed that risks to energy price paths remained skewed to the upside and acknowledged that sustained disinflation had occurred prior to the conflict. However, members drew varying degrees of reassurance from that prior disinflation. For most members, it was consistent with a margin of economic slack; for others, it was not informative about future inflation.

The Committee unanimously agreed there had been little evidence of material second-round effects to date and committed to continuing to monitor forward-looking data for timely assessment of the inflation outlook. Overall, members concluded that the risk of stronger inflationary pressures outweighed the risk of weaker ones, and noted that policy may need to adjust before risks around inflation persistence materialise conclusively.

Regarding the dissent by Greene, Pill, and Mann, the minutes stated:

"These members were less reassured on the underlying disinflationary process, were concerned that second-round effects could be material, and thought it relevant that inflation had exceeded the 2% target for more than five years. For these members, uncertainty about how the conflict would evolve remained high, and so a risk management strategy was appropriate. They believed that a proactive increase in Bank Rate would reduce the probability of second-round effects setting in. Further, research found that setting policy as if there were stronger second-round effects and course correcting if needed, would prove to be less costly than vice versa."

The dissenting votes were broadly anticipated. Greene and Pill had been widely expected to dissent, while Mann has maintained a generally hawkish posture despite some shifts in recent meetings. In that context, the 6–3 vote is not markedly different in implication from the expected 7–2 outcome.

Taken as a whole, the statement reinforces that the Committee is keeping the option open to raise rates again if warranted, though there is little indication of urgency to act at present or in September unless incoming data shifts the outlook. The Committee indicated that more concrete evidence of second-round effects or more persistent inflationary pressures would be needed to justify a broader shift in policy, and that absent such evidence, it will adopt a wait-and-see approach. With inflation having exceeded target for over five years, the next key data points — including labour market indicators, services inflation, and wage growth — will be closely watched for any sign that price pressures are becoming embedded in the economy.