Bank Rate 3.75% is staying put after a knife-edge 5–4 vote at the Bank of England, and that narrow split matters more than the hold itself. A one-vote shift is now enough to change the policy path — a setup that can move sterling, short-dated gilt yields, and UK borrowing costs fast.
What the Bank of England decided on 4 February 2026
At its meeting ending 4 February 2026, the Bank of England’s Monetary Policy Committee (MPC) voted 5–4 to maintain Bank Rate at 3.75%. Four members wanted an immediate 0.25 percentage point cut to 3.5%.
The Bank’s official summary also set the tone for what comes next: based on current evidence, Bank Rate is “likely to be reduced further,” but the extent and timing of any easing will depend on how the inflation outlook evolves.
Why the 5–4 split is a policy signal, not a footnote
A close vote doesn’t guarantee a near-term cut, but it does show the MPC is no longer debating whether easing is on the table — it is debating when.
Reuters reported that economists polled ahead of the decision expected a much wider split (7–2) in favour of holding rates. The actual 5–4 outcome therefore landed as more dovish than many investors had positioned for — and that gap between expectations and the decision is often what drives the biggest market repricing.
Who voted which way
According to the BoE minutes, the “hold” votes came from Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann, and Huw Pill. The “cut” votes came from Sarah Breeden, Swati Dhingra, Dave Ramsden, and Alan Taylor.
The minutes show the dividing line was not about ignoring disinflation. It was about how much confidence members need that inflation will stay at target once it gets there.
What the minutes say about the “cut timing” debate
The BoE minutes frame the decision as a balance between two error risks:
Cut too soon: policy might become insufficiently restrictive if underlying price and wage pressures don’t cool enough.
Hold too long: policy might stay overly restrictive, deepening slack and raising the odds of an inflation undershoot later.
The Bank noted CPI inflation had dropped from 3.8% in September 2025 to 3.4% in December 2025, and it expects CPI inflation to fall back to around the 2% target from April 2026, driven in large part by energy-related factors (including measures linked to Budget 2025).
The minutes also underline why members can read the same data differently. Some members argued that a visible fall in headline inflation — especially in household-salient items like energy and food — can reduce inflation expectations and speed the normalisation of wage and price-setting. Others stayed wary that expectations and forward-looking wage indicators could remain elevated even as headline inflation drops.
A key phrase to watch: “closer call”
The Bank’s summary language matters: decisions on further easing are becoming a “closer call.” In practice, that means each new inflation print, wage indicator, and labour-market release has more power to swing the committee than when the path was clearer.
The forecast backdrop: energy is doing a lot of the work
In the February 2026 Monetary Policy Report, the BoE projected CPI inflation to slow sharply in the first half of 2026. One concrete channel is household energy: the report expects the Ofgem price cap to fall in April 2026 to £1,616 from £1,758, reflecting lower wholesale gas prices and fiscal measures.
The report also highlights a broader easing story, with wage growth and services inflation generally cooling — but still not necessarily back to levels consistent with inflation sitting at 2% without continued policy restraint.
What moved on the day: sterling and UK rates expectations
Markets tend to trade the marginal information. On 5 February 2026, after the decision and minutes were published, Reuters reported that sterling and UK borrowing costs fell as investors increased bets on rate cuts, reflecting how the close vote pulled expectations forward.
That reaction is also the practical takeaway for businesses and households: even without a rate cut, a tighter vote can lower market-implied rates and feed through to pricing for shorter-term fixed mortgages, corporate credit, and hedging costs — although pass-through is neither instant nor uniform.
What to watch before the next MPC decision on 19 March 2026
The BoE lists the next decision date as 19 March 2026. Between now and then, the “cut timing” debate is likely to hinge on a few trackable data points:
Inflation persistence vs. one-off drops
If disinflation is mainly energy-driven, the MPC will look harder at measures that capture domestic pressure — especially services inflation and wage growth.
Labour-market slack
The minutes describe “building slack” and a loosening labour market. Evidence that slack is widening faster than expected can strengthen the case for earlier easing.
Inflation expectations and pay-setting
Members explicitly debated whether falling headline inflation will pull expectations down quickly. Survey-based measures, wage settlements, and company pricing intentions will all be scrutinised.
What it means in plain terms
The Bank Rate 3.75% hold is a steady hand on the wheel — but the 5–4 split is the real story. It tells markets and borrowers that the next move is still more likely down than up, while also warning that cuts will be conditional, not automatic. For anyone exposed to sterling or short-dated UK rates, the policy path is now a live, meeting-by-meeting call.