On 17 June 2026, the Bank of England's Monetary Policy Committee voted seven to two to hold Bank Rate at 3.75% — the fourth consecutive meeting at which the rate has been held. The two dissenting members voted to increase the rate by 0.25 percentage points to 4%.

The Bank's rationale was shaped heavily by the Middle East conflict that erupted in spring 2026. Global energy prices have fallen since the previous MPC meeting as tensions eased, but they remain higher than before the conflict and continue to be volatile. CPI inflation in the UK was 2.8% in May 2026 — above the Bank's 2% target. The Bank now forecasts inflation to be slightly under 3% in Q3 2026 and slightly over 3.25% in Q4, driven by energy price pass-through. Against this backdrop, the MPC judged that a hold was appropriate — neither cutting in the face of above-target inflation nor raising unnecessarily given the loosening labour market.

The next scheduled MPC decision will be announced on 30 July 2026.

A Brief Recap of Where Rates Have Come From

Bank Rate peaked at 5.25% in August 2023, the highest level since 2008, as the MPC responded aggressively to post-pandemic inflation. A gradual cutting cycle began in August 2024. By December 2025 the rate had been reduced to 3.75%, where it has since remained.

The expectation prior to the Middle East conflict was that further cuts would follow in early 2026, with market pricing suggesting the rate could fall to around 3.25% by year end. The conflict has disrupted that path. Most analysts now expect rates to remain on hold until at least Q4 2026, with the shape and pace of any future cuts dependent on how energy prices, inflation, and the labour market evolve over the summer.

What This Means for Business Borrowing

For businesses with variable-rate borrowing — overdrafts, revolving credit facilities, or loans linked to base rate — the hold means no change to monthly financing costs from the June meeting. This is a relative positive compared to the rate environment of 18 months ago: at 3.75%, borrowing costs are considerably lower than the 5.25% peak and meaningfully lower than the mid-2024 period.

For businesses considering taking on new debt — to fund equipment, expansion, or working capital — the hold provides a degree of certainty about what current rates look like over the short term. SME lending has been rising: the most recent Bank of England data showed gross new lending to small businesses up 14% year-on-year in the first quarter of 2026, the largest increase since late 2024.

However, the overall level of outstanding lending to SMEs in real terms remains more than 20% below its 2012 peak. Many businesses that would benefit from external finance continue to self-fund or avoid borrowing entirely. If your business has growth plans — new equipment, premises, or staff — that could be funded through commercial borrowing at current rates, it is worth revisiting that analysis now rather than assuming future cuts will make borrowing significantly cheaper.

What This Means for Business Cash Deposits

Higher interest rates have been beneficial for businesses with cash reserves. Easy-access business savings accounts have been offering 4% or more since early 2025 — a return that would have been inconceivable during the decade of near-zero rates from 2009 to 2021. With the rate held at 3.75%, the top easy-access savings rates are unlikely to fall significantly before the next MPC decision on 30 July.

For businesses sitting on substantial cash reserves — perhaps retained profits held in a company, or the proceeds of a property or business sale held while the next investment is decided — this is a reasonable environment to be in cash, provided the funds are in an account that is actually paying a competitive rate. Many business current accounts still pay negligible interest. Moving surplus cash into a business savings account or notice account takes one phone call and can generate meaningful income on balances of £50,000 or more.

From a Corporation Tax perspective, any interest earned on business cash deposits is taxable income for the company. This is worth keeping in mind when calculating the after-tax return on cash savings.

What This Means for Buy-to-Let Landlords

For property investors with tracker mortgages on residential or commercial buy-to-let properties, the hold means no change to monthly mortgage costs. Fixed-rate buy-to-let products have been pricing in expectations of future cuts: at the time of writing, two and five-year fixed rates for buy-to-let mortgages start from around 4.43–4.47% for residential and somewhat higher for limited company products.

For landlords approaching the end of a fixed-rate term, the decision of whether to fix again or move to a tracker product depends on your view of where rates go from here. With the MPC on hold and energy price volatility making the path of rate cuts uncertain, locking in a fixed rate provides certainty. The downside is forgoing any benefit from cuts that do eventually materialise. A specialist buy-to-let mortgage broker can model both scenarios against your specific portfolio.

What This Means for Personal Mortgages

For business owner-directors whose personal mortgage is on a tracker or standard variable rate, the hold is straightforward: no change to monthly payments from the June decision. Those on SVRs — typically around 5.34% to 6.9% — are still paying well above the best available fixed rates (circa 4.43–4.47% for two-year fixes) and should consider remortgaging.

For those coming to the end of a fixed-rate term in the next six months, many lenders allow you to agree a new rate up to six months in advance. Securing a rate now while continuing to watch the market — and switching to a better deal if one emerges before completion — is the generally recommended approach rather than waiting and risking further volatility.

What to Watch at the July 30 MPC Meeting

The next MPC announcement on 30 July 2026 will also come alongside the Bank's quarterly Monetary Policy Report, which includes the Bank's full economic forecasts. The key variables shaping the decision will be:

  • Whether energy prices stabilise or rise further as a result of Middle East developments
  • June 2026 CPI inflation data (due mid-July)
  • Labour market data showing whether wage growth is moderating
  • Any ceasefire or escalation in the Middle East conflict

If inflation data comes in below expectations or energy prices fall further, a cut at the July meeting is possible. If inflation ticks back up, a hold — or even a rise — cannot be ruled out. CoreAcc will publish commentary on the July decision as soon as it is announced.

Need to review your business financing, cash management, or mortgage position in light of the current rate environment? Contact CoreAcc Accountants — we can help you model the numbers and connect you with specialist advisers where needed.

This article was last reviewed in July 2026. CoreAcc is not a mortgage broker or financial adviser. For mortgage and investment advice, please consult a regulated specialist.

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