Interest rates live: Inflation rises ahead of Bank of England’s first rates vote of 2026

The Bank of England is unlikely to commit to the timing of any future interest rate cuts, according to its chief market strategist.

Julien Lafargue of Barclays Private Bank said: “The Bank of England is expected to leave interest rates unchanged in February.

“Looking at the budget, we can see a more positive outlook on the inflation front, at least in the short term.

“When it comes to forward guidance, the BoE will likely not commit to the timing of future interest rate cuts.

“However, the low inflation ahead and continued softening in the UK labor market should reinforce the central bank’s view that the path for monetary policy is towards a lower Bank rate, potentially as early as next month.”

Economists predict a 6-3 split in today’s Monetary Policy Committee, with the majority of members in favor of keeping interest rates steady.

Thomas Pugh, chief economist at audit, tax and consultancy firm RSM UK, said: “Growth accelerated in November and surveys suggest a strong start to the year, which will be enough to keep the MPC on hold despite continued easing in the labor market.

“The guidance will likely continue to indicate that further rate cuts are likely but will become increasingly cautious about the timing and number of additional rate cuts needed.”

Mr Pugh said the PPC would be more cautious about future rate cuts and expected only one cut in April this year.

“However, if the labor market continues to weaken and that weakness translates into a faster-than-expected slowdown in wage growth, the MPC may be persuaded to make further cuts.”

The pound is slightly weaker than the US dollar, down by a third at around $1.3620.

Sterling came under pressure, at its lowest level in nearly two weeks, ahead of an interest rate decision later today.

According to expert analysis, interest rates are expected to remain broadly at 3.75% as Bank of England policymakers prioritize containing above-target inflation while also monitoring economic growth.

The bank’s Monetary Policy Committee (MPC) is expected to leave borrowing costs unchanged when it announces its final decision on Thursday, the first interest rate-setting meeting of the year.

This follows a rate cut before Christmas, the fourth such cut.

At the time, Governor Andrew Bailey stated that the UK had “overtaken the recent peak in inflation and continues to fall”, allowing the MPC to ease borrowing costs. But he also warned that further cuts would be a “close call”.

Since that decision, official data has revealed that inflation unexpectedly picked up in December, rising for the first time in five months.

One large group of people who will be keeping a close eye on rate decisions is anyone getting or renewing a mortgage soon.

But of course, the headline rate is not the only thing that matters when it comes to this decision.

Aaron Shinwell, chief credit officer at Nottingham Building Society, explains why now might be a good time and what else you should look for.

“Mortgage rates are currently at their lowest levels since 2022, creating real opportunities for anyone looking to buy or remortgage. “Rates have already passed their peak and may fall gradually over time, which is good news for the 1.8 million borrowers expected to remortgage this year, giving first-time buyers a more realistic route onto the property ladder.”

“Small changes in expectations for future base rate cuts are already affecting mortgage prices and we expect modest downward movements in rates through 2026, which could help support demand.

“Getting the right mortgage isn’t just about chasing the lowest interest rate. Term length, overpayment flexibility and long-term affordability are all important. Contacting a broker early can make a real difference to whether or not you secure a mortgage offer now, preserving the flexibility to switch if better options arise before completion.”

The base rate, now 3.75 per cent after being cut four times last year, affects businesses, consumers and taxpayers on everything from mortgages to loans and savings; So what do experts predict both this week and beyond?

Here’s everything you need to know before today, including the key factors that influence interest rate decisions.

So let’s give some details about what will happen today and what to expect.

What: MPC members vote to reduce, maintain or increase interest rates.

WHO: The Monetary Policy Committee (PPC) has nine members and “wins mostly votes”; For example, last time there was a 5-4 vote in favor of cuts. BoE governor Andrew Bailey is one of those nine.

Time: Voting results and meeting minutes will be published at noon.

What’s next: The biggest insight into what might happen in the future can often be the detail in the subsequent press conference or written voting statement: Attention, what they want to see in economic data, expectations, etc.

Today you’ll see variations of the same thing: What we commonly call an interest rate. Officially it is the Bank Rate (the rate set by the Bank of England) and is what the BoE itself calls the “core interest rate”.

You may also see the term “base rate”, which also means the same thing: all other banks and building societies base their rates on bank interest rates.

Here’s how we got to 3.75 percent over the past few years:

Note the quarterly declines over the past year and a half, which brings us down from the high of 5.25 percent.

Good morning everyone and welcome to The Independent’s live coverage of the Bank of England’s first interest rate vote in 2026.

Last year we made four cuts and reduced the base interest rate to 3.75 percent; That’s good news for those renewing their mortgage deals at much higher levels after a few years, but less so for savers looking to get higher returns on their cash.

All the details and reactions after the vote are coming.