UK Monetary Policy Summary

At its meeting ending on 17 June 2026, the Monetary Policy Committee (MPC) voted by a majority of 7–2 to maintain Bank Rate at 3.75%. Two members voted to increase Bank Rate by 0.25 percentage points, to 4%. Global energy prices have fallen since the previous meeting in response to events in the Middle East. But they remain higher than pre-conflict and have continued to be volatile. The impact of the energy shock on the UK economy remains uncertain. Monetary policy cannot influence energy prices but is being set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably. The policy stance required to achieve this will depend on the scale and duration of the shock, and how it propagates through the economy. CPI inflation has fallen to 2.8% since the previous meeting, although it is expected to rise later this year as the effects of higher energy prices continue to pass through. The risk of material second-round effects in price and wage-setting, against which policy needs to lean, is greater the longer higher energy prices persist. But the labour market continues to loosen, and signs of a weakening economy could contain inflationary pressures. Interest rates faced by households and businesses remain higher than prior to the conflict, which will act to reduce inflation over time. Taking all the risks to the economic outlook into account, the Committee judges that it is appropriate to maintain Bank Rate at this meeting. The Committee will continue to monitor closely the situation in the Middle East and how its impact propagates through the economy. The Committee stands ready to act as necessary to ensure that CPI inflation remains on track to m BAILEY: PRESSURES FROM IRAN WAR STILL IN PIPELINE DESPITE TRUCE BOE KEEPS GUIDANCE THAT IT 'STANDS READY TO ACT' ON INFLATION BANK OF ENGLAND HOLDS KEY INTEREST RATE AT 3.75% IN 7-2 VOTE BOE BREEDEN: CHANCE OF MATERIAL 2ND-ROUND EFFECTS IS SMALL BOE'S BAILEY, BREEDEN, BREEDEN AND LOMBARDELLI: WOULD RESPOND QUICKLY TO SIGNS OF STRENGTHENING SECOND-ROUND EFFECTS BOE'S GREENE: RATE HIKE VOTE IS INSURANCE AGAINST LARGER SECOND-ROUND INFLATION EFFECTS

BoE Gov. Bailey: Pill’s dissent is perfectly understandable. BoE Gov. Bailey: There are really bad scenarios in the Iran conflict. BoE Gov. Bailey: We will take a while to get a read on wage settlements.

BoE Gov. Bailey: It would be a mistake to wait for second round effects before acting, that would be too late. BoE’s Bailey: Won't Put Numbers Of What 'Forceful' Looks Like - It Would Be A Mistake To Wait For Second Round Effects Before Acting, That Would Be Too Late - I Think Energy Price Profile Of Scenario B Is More Plausible Than Scenario A MORE BOE'S BAILEY: TODAY'S HOLD IS AN 'ACTIVE HOLD'; IT'S NOT A 'WAIT AND SEE HOLD' #ukeconomy #bankofengland #boe #mpc #monetarypolicy #interestrates #inflation

BoE Gov. Bailey: Monetary policy cannot prevent higher global energy prices from affecting UK economy and inflation. BOE'S BAILEY SAYS WE NOW PROJECT INFLATION WILL RISE TO A LITTLE OVER 3.5% BY END OF YEAR || SAYS INITIAL INDIRECT EFFECTS OF INFLATION ARE LIKELY TO BE LARGEST FOR FOOD PRICES BOE'S BAILEY SAYS THE LONGER THE CONFLICT IN MIDDLE EAST LASTS, THE WORSE THE IMPACT WILL BECOME BoE Gov. Bailey: The sheer volatility of energy prices makes it impossible to put probabilities on different scenarios.