01/05/2026
The Bank of England has held the base rate at 3.75% - but the bigger story sits beneath the headline.
While markets expected rates to remain unchanged, today’s MPC decision highlighted growing uncertainty around inflation, energy markets, and the wider economic outlook.
Key themes emerging from the meeting included:
📊 rising inflation expectations
🌍 geopolitical pressures impacting energy prices
⚠️ modelling showing inflation could potentially reach 6.2% in 2027 under downside scenarios
📈 discussion around rates potentially rising further if inflation proves more persistent
Importantly, the vote was not unanimous, with one MPC member voting for a rate increase - signalling increasing concern around inflationary pressures and wage growth.
What does this mean from a mortgage perspective?
- Fixed-rate borrowers remain relatively protected in the short term
- Tracker and SVR products remain more exposed to future rate movements
- Lender pricing continues to be driven by forward expectations, not just today’s base rate
- Affordability assessments may become more cautious if volatility continues
The key takeaway is not simply that rates were held. It’s that uncertainty remains high - and future policy decisions are becoming increasingly dependent on how inflation evolves over the coming months.
For borrowers and property investors alike, this reinforces an important reality: planning ahead and understanding your options is becoming more important than trying to perfectly predict what rates will do next.
