The Monetary Policy Committee voted by majority of 8-1 in favour of holding the rate.

Prior to the ongoing conflict in the Middle East, the BoE was expected to cut base rate by at least 0.25% today but the institution is set to remain cautious throughout 2026.

In the last BoE Monetary Policy Committee meeting in March, members voted unanimously to keep base rate at 3.75%. The conflict has caused swap rates to rise, dragging up the cost of fixed-rate mortgages.

Inflation rose to 3.3% in the year to March, up from 3% in February, as the war in Iran triggered the biggest jump in petrol and diesel for more than three years.

Today, the MPC said: “Taking all the risks to the economic outlook into account, the Committee judges that it is appropriate to maintain Bank Rate at this meeting.”

“The committee will continue to monitor closely the situation in the Middle East and how its impact propagates through the economy. The committee stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.”

Commenting on today’s decision, MT Finance director Joshua Elash Says: “Holding base rate at 3.75% was the right thing to do in the current climate.”

“The conflict in Iran has lasted longer than many expected and has already impacted inflation and energy prices. That the MPC continues to stand firm and not rush decisions is a good thing. This will hopefully provide some form of stability for lenders and borrowers alike.”

RAW Capital Partners managing director Ben Nichols adds: “There was some talk of a rate hike ahead of today’s decision, so the market will be breathing a small sigh of relief that it has held steady for now.”

“The conflict in the Middle East has clearly added some upwards pressure to the inflation outlook, particularly around energy costs, but growth has to remain part of the conversation too. On that front, after a challenging few years, it’s encouraging to see the Bank avoid adding further pressure to the economy.”

“For the property market, it also gives brokers and borrowers a bit more certainty in the short term. We’ve already seen some lenders start to reduce rates after initially pricing in more risk and, hopefully, today’s decision supports that trend and gives brokers and borrowers more confidence to move ahead with their plans.”

“That said, the speed at which rates have risen since the start of the conflict has naturally affected sentiment, so lenders need to keep providing clarity and flexibility, while listening closely to the challenges brokers are seeing on the ground.”