Bank of England holds interest rate at 3.75% amid inflation concerns

The Bank of England left its main interest rate at 3.75% after UK consumer inflation rose to 3.4% in December, above the 2% target.

Bank of England policymakers have left the official interest rate on hold at 3.75%. The monetary policy committee had cut rates six times since mid-2024, most recently by a quarter point in December. The decision follows data showing consumer price inflation rose to 3.4% in December, above the Bank's 2% target. Chancellor Rachel Reeves is hoping for further rate reductions after measures announced in her November budget and has said 2026 will be the year Britain turns a corner on inflation. The Bank is monitoring the jobs market closely, and external MPC member Megan Greene warned the decline in wage growth seen through 2025 "may have run its course". Key facts: - The MPC left the Bank Rate unchanged at 3.75%. - The committee has cut rates six times since mid-2024, with a quarter-point reduction in December. - UK consumer price inflation rose to 3.4% in December, the first increase in five months. - Chancellor Rachel Reeves announced measures in her November budget and is hoping for further rate reductions in the coming months. - External MPC member Megan Greene said the decline in wage growth through 2025 may have run its course. Summary: The Bank's decision keeps borrowing costs unchanged while inflation remains above the 2% target, sustaining a cautious policy stance. The committee will continue to monitor inflation and labour market indicators as it considers future moves. Undetermined at this time.