The Monetary Policy Committee (MPC) of the Bank of England voted to maintain the Bank Rate at 3.75% in their March meeting.

Conflict in the Middle East has caused a significant increase in global energy and other commodity prices. The adverse effects of the Strait of Hormuz closure on global oil supply would be only partly mitigated by the International Energy Agency members’ coordinated release of strategic reserves. The US supreme court ruling on previously imposed International Emergency Economic Powers Act (IEEPA) tariffs had led the US administration to replace previous tariffs with a uniform 10% tariff on all trade partners. This led to increased uncertainty around the medium-term outlook for US trade policy.

Headline CPI inflation was 3.0% in January, slightly above than expected in the short-term February Report. Service price inflation has been 4.4% in January with Bank staff expecting headline inflation to be above 3.0% in February.  CPI inflation will be higher in the near term due to the recent economic shock.

UK GDP grew 0.1% in Q4 2025. Business activity has remained subdued in the first quarter of 2026 and the Bank staff project underlying quarterly GDP growth for Q1 2026 to be between 0.1%-0.2%.

Labour demand remained weak with unemployment rate 5.2% in the three months to January. Employment growth remained subdued, and the vacancies‑to‑unemployment ratio continued to sit below Bank staff estimates of its equilibrium level.

The Committee is vigilant in monitoring the conflict development in the middle east and its impact on global energy supply. Monetary policy cannot influence global energy prices, but it aims to ensure that the economic adjustment to them occurs in a way that achieves the 2% target inflation.

The next scheduled monetary policy meeting will be on April 30, 2026.

Source: Bank of England, Monetary Policy Summary, March 2026