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Bank of England rate-setting panel shows rare unity amid Iran war
The MPC's unanimous vote to hold rates at 3.75% marks a dramatic shift from its usual internal divisions as energy price shocks reshape the UK's monetary outlook
The Bank of England’s Monetary Policy Committee voted 9-0 to hold the Bank Rate at 3.75% on March 19, 2026.
From rate cuts to rate holds
Before the Iran conflict erupted in March 2026, markets were pricing in rate cuts. The UK economy had been cooling, inflation was moderating, and the MPC seemed poised to start easing. Then the Strait of Hormuz, through which a significant chunk of global oil transits, became a conflict zone. Energy prices surged.
The April 30 meeting voted 8-1 to maintain rates, with Chief Economist Huw Pill casting the lone dissent. Pill wasn’t pushing for cuts — he was arguing for a 25-basis-point hike.
The inflation problem nobody wanted
Governor Andrew Bailey acknowledged that monetary policy cannot directly counteract supply shocks. Under adverse scenarios, the Bank’s own forecasts now show inflation potentially exceeding 6%.
What this means for markets and investors
The rate-cutting cycle many investors had positioned for is, at minimum, on pause. If inflation does push toward 6%, holding rates at 3.75% would mean real interest rates are deeply negative, which typically forces central banks to act regardless of growth concerns.
When the Bank of England’s chief economist is arguing for rate increases while the rest of the committee holds firm, the internal debate could tip hawkish quickly if energy prices don’t stabilize. Any escalation in the Iran conflict, particularly anything that further disrupts oil transit through the Strait of Hormuz, would likely accelerate that shift.