Bank of England Holds Rates at 3.75%
18 Jun 2026 · 4 min read
The Bank of England has held the base rate at 3.75%, leaving borrowing costs unchanged for another month and keeping savings rates near their best levels in years.
The Monetary Policy Committee announced the decision at midday today, voting [CONFIRM SPLIT — expected to be more hawkish than April's 8–1, with Huw Pill and Megan Greene signalling support for an immediate rise] to keep the rate where it's sat since December 2025. It was the outcome markets and economists had all but priced in — a Reuters poll of 65 economists found every single one expected a hold.
For savers, no news is good news. The decision keeps the floor under savings rates at a time when competition between providers is already doing the heavy lifting.
Why the Bank held
The case for sitting still came down to one word: uncertainty. Inflation has climbed to 3.3%, pushed up by energy prices linked to the conflict in the Middle East, and the Bank expects it to rise further later this year. That's the opposite of the backdrop you'd cut rates into.
But growth is soft, which is the opposite of the backdrop you'd hike into. Caught between the two, the Committee — led by Governor Andrew Bailey and deputy governor Sarah Breeden — chose to wait for more data before moving in either direction. [CONFIRM — add a line from Bailey's statement once published.]
The more telling detail is the split. In April, the Committee voted 8–1 to hold, with chief economist Huw Pill breaking ranks to call for a hike to 4% — the first vote for an increase since the tightening cycle ended in summer 2023. Heading into today, Pill and external member Megan Greene had both signalled they'd back an immediate rise, with Catherine Mann open to one if energy costs worsen. A wider split today would confirm the Committee's centre of gravity is drifting hawkish.
That matters more than the headline. Nearly 40% of economists in the Reuters poll now expect at least one rate hike this year, and only six saw a cut coming by year-end. The forecast range for where rates land in 2026 runs from 3.5% all the way to 4.25%.
What it means for your savings
Higher-for-longer rates are exactly what savers want to hear. With the base rate held, the strong deals currently on the market have no immediate reason to retreat — and there's a genuine chance fixed rates climb further if the Bank does hike later in the year.
Where the best rates sit right now:
More than half of all savings accounts now beat the base rate, so a high-street account paying 1–2% is leaving serious money on the table. If you haven't checked your rate in the last six months, today is the prompt.
With rates this high, tax is the quiet drag. The Personal Savings Allowance covers £1,000 of interest tax-free for basic-rate taxpayers, £500 for higher-rate payers and nothing for additional-rate payers. At 5%, a higher-rate taxpayer breaches that allowance with around £10,000 saved.
That's why a Cash ISA still earns its place. The 2026/27 allowance is £20,000, and interest inside it is tax-free permanently. One thing to note: from April 2027, under-65s will be capped at £12,000 a year into Cash ISAs — so this tax year is the last chance to shelter the full £20,000 in cash.
The bottom line
Today's hold changes nothing on its own, and that's the point: strong savings rates stay put. The real signal is the direction of travel, and right now it points to rates staying high with a real chance of going higher. If your money is earning less than 4%, the decision to move it is yours — and the Bank just made the case for it.