Interest rates expected to be held by Bank of England
BBC News 2026-06-17 23:01:11
Context: The Bank of England is expected to hold interest rates at 3.75% for a fourth consecutive meeting, as policymakers closely monitor the impact of global events, including the situation in the Middle East, on inflation. The UK inflation rate remains above target but has not risen as high as feared, with the rate of food price rises slowing to a 17-month low. The Monetary Policy Committee's decision will be announced at 12:00 BST on Thursday.
Key Facts
- The UK inflation rate remained at 2.8% in the year to May, according to official figures published on Wednesday, which was lower than expected and reinforced expectations that policymakers will not need to increase interest rates.
- The Office for National Statistics reported that transport costs rose by the fastest rate in the year to May, while the rate of price increases in meat, dairy, and vegetables eased.
- Analysts believe that a potential US-Iran peace deal could slow energy and fuel price rises, making the worst-case scenarios for inflation unlikely, with oil prices dropping close to their lowest since the conflict began.
- The Bank of England's base rate influences what banks and building societies charge their customers for mortgages and the interest rate they pay on savings, with the average rate on a new two-year fixed mortgage deal rising to 5.60% as of 17 June.
- Millions of UK households' energy bills are governed by regulator Ofgem's price cap, which will increase by 13% in July, with analysts predicting that UK inflation is expected to increase over the summer after the next Ofgem price cap.