20 Mar 2026
The Bank of England has voted to hold interest rates at 3.75% in a decision that was widely expected since war broke out in Iran.
As recently as February, economists had widely expected further cuts to interest rates this year amid falling inflation.
But fears the conflict will drive a renewed period of higher inflation in the UK prompted the Bank to put any further cuts on hold.
The Bank's Monetary Policy Committee (MPC) voted unanimously on the decision to hold rates.
Alpesh Paleja, Deputy Chief Economist at the Confederation of British Industry, said: 'Higher global energy prices and renewed supply bottlenecks – stemming from conflict in the Middle East – are likely to push inflation higher in the near term. That could delay a return to the 2% target by almost a year, after the Bank had previously expected inflation to reach that point this summer. It will also weigh somewhat on economic growth.
'Much will depend on how the conflict evolves: whether energy prices rise further, how long any increases last, and – crucially – whether households' inflation expectations begin to move materially higher. With so much still uncertain, the MPC may remain in a holding pattern for at least the next few months, even though there is still a broad inclination within the Committee to lower rates over time.'