Bank of England Holds Rates at 3.75% After Split Vote; Caution Prevails Amid Sticky Inflation

The Bank of England decided on Thursday, February 5, 2026, to keep interest rates steady at 3.75% following a narrow 5-4 vote. This closely contested decision highlights the dilemma facing the Monetary Policy Committee: balancing a weak growth outlook and rising unemployment against a resilient start to the year that could fuel inflation. While inflation has cooled significantly, it remains at 3.4%, still comfortably above the Bank’s 2% target.

The Bank signaled that further cuts remain on the table later this year, provided that the anticipated drop in inflation proves sustainable. This pause breaks a steady downward cycle observed over the last 18 months, suggesting that policymakers are wary of cutting too early as the British economy shows unexpected signs of vitality at the start of 2026.