Bank of England holds rate at 3.75% as persistent inflation delays cuts to 2027

The Bank of England has held its key interest rate at 3.75% for the fourth consecutive meeting, signaling that UK inflation will remain stubbornly above the 2% target for an extended period as projections suggest it will hover near or above 3% into 2026. This decision, passed by seven to two votes, directly affects British households and businesses by keeping borrowing costs high and delaying expected mortgage relief, as the central bank prioritizes containing inflation driven by rising energy prices over cutting rates to stimulate weak growth. While the inflation forecast is significantly better than the alarming April projections that warned of peaks up to 6.2%, the persistence of above-target inflation means interest rates are unlikely to fall until at least early 2027, with some experts suggesting rate cuts could only begin in spring 2027.