The Bank of England’s (BoE) base rate has been held once again at 3.75%, remaining unchanged in 2026.

The central bank's decision to hold the base rate, which remains at its lowest since February 2023, follows a drop in inflation to 2.6% in June. However, the ongoing conflict in the Middle East and the subsequent supply of energy has raised prices on motor fuels and utility bills.

The BoE is therefore cautious that inflation may rise again as energy price rises have knock-on effects on households and businesses.

The Monetary Policy Committee (MPC) voted seven to two in favour of holding the base rate at 3.75% in its latest meeting, with two members voting to increase the rate to 4%.

Chief commercial officer at Fleet Mortgages, said the decision to hold the base rate feels like a “continued common sense approach given the current backdrop”.

He added: "While inflation remains a concern, and the renewed conflict in the Middle East and future energy price hikes are likely to push it higher in the months ahead, there are still enough questions surrounding wider economic growth levels to justify keeping rates where they are for now.

"The decision will certainly be welcomed by the new Prime Minister and Chancellor, who have set an early stall out to ease the cost of living rather than adding to it, and will not have wanted to see monthly mortgage bills rising for some so soon.”

Head of business development at Saffron for Intermediaries, Tony Hall, said that while borrowers are eager for lower rates, policymakers are remaining cautious around potential inflation increases.

He concluded: "Although competition between lenders remains strong, affordability continues to be the biggest barrier for many buyers, particularly following a recent uptick in mortgage repricing. In a fast-moving market, expert mortgage advice is more valuable than ever in helping borrowers secure the right deal for their circumstances.

"With Burnham’s new government placing housing and planning reform firmly on the agenda, attention will now turn to whether those ambitions can translate into greater confidence, improved affordability and more opportunities for aspiring homeowners."

The MPC will meet again on 17 September to hold or change the base rate.

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