Bank of England governor Andrew Bailey said a Bank of England rate cut is off the table, telling a panel at the European Central Bank’s annual forum in Sintra, Portugal, that inflationary pressures from the Middle East conflict have fundamentally shifted the monetary policy outlook. The Bank of England’s June 2026 MPC minutes show the committee voted 7–2 to hold Bank Rate at 3.75% at its meeting ending 17 June 2026.
‘There was an expectation that we would cut rates this year,’ Bailey said. ‘That was off the table in March, and it’s off the table at the moment.’
Fourth Consecutive Hold Since December 2025
The June decision marks the fourth meeting in a row at which the MPC has kept rates at 3.75%, according to MoneyWeek. The rate has been frozen since the Bank cut by 0.25 percentage points from 4.25% to 4% in a 5–4 vote at its August 2025 meeting, before a further reduction brought it to the current level in December 2025.
Bailey voted for the hold, citing softness in the real economy and uncertainty around the energy price shock. He assessed risks to both inflation and interest rates as being on the upside, and told the Sintra panel he would respond ‘promptly’ to signs of widening inflationary pressures, according to Central Banking.
Two external members dissented. Megan Greene and chief economist Huw Pill voted for a rate rise, warning that households are now more sensitive to inflationary shocks than they were in 2022.
Bank of England Rate Cut Path Blocked by Energy Pass-Through Risk
CPI rose by 2.8% in the 12 months to May 2026, unchanged from the 12 months to April 2026, the Office for National Statistics (ONS) reported. That reading remains well above the Bank’s 2% target.
The ONS April 2026 bulletin showed the annual rate had fallen from 3.3% in March 2026 to 2.8% in April 2026, offering some relief. The Bank’s June summary projects CPI will rise later in 2026 as higher energy costs continue to pass through, though inflation overall is expected to come in lower than prior forecasts for the year.
Bailey said the Bank is focused on second-round effects from energy prices. ‘We’re very focused on the risks of pass-through of the energy prices to indirect effects, and things like food prices and the second-round effects,’ he said. ‘We obviously don’t want inflation to become embedded.’
Earlier this week he told CNBC the Bank was ‘not happy’ with the rate of inflation and was ‘not complacent at all.’
On oil, Bailey said the fall in prices following the fragile US-Iran peace agreement was ‘encouraging’ but cautioned that crude had not yet returned to pre-war levels. Brent crude fell below $71 per barrel this week, its lowest since late February when the war began. Iran’s closure of the Strait of Hormuz, through which around a fifth of global oil supply passes, drove months of volatility in energy markets. Negotiations over who will control the waterway are continuing as part of the peace talks.
In Portugal, Bailey said he had been prepared to ‘tolerate temporarily above-target inflation as part of a return to target,’ a position he outlined in June.
Federal Reserve chair Kevin Warsh, also speaking at the ECB Sintra forum, said on Wednesday he believed inflation risks in the US had ‘come down’ but reiterated his commitment to ‘price stability.’
The MPC’s next scheduled meeting concludes on 30 July 2026, when updated projections and any fresh energy-price data will test whether the committee’s upside risk assessment has shifted.
