Will the Bank of England cut interest rates on 19 March 2026? Latest interest rate predictions explained

What’s happening with interest rates in England?

• The Bank of England sets the base rate for the whole UK, including England. This influences mortgage rates, savings rates and the wider cost of borrowing.
• After peaking at 5.25% in 2023 and 2024, interest rates in England have gradually fallen to 3.75% as inflation pressures have eased. However, policymakers have remained cautious about cutting too quickly in case inflation proves more persistent.

Will the Bank of England cut interest rates on 19 March 2026?

• Many analysts had predicted the Bank of England would cut interest rates on 19 March.
• While there was division within the Bank of England‘s Monetary Policy Committee on the future path of rates, Governor Andrew Bailey told MPs on 24 February the prospect of an interest rate cut within weeks was “a genuinely open question”.

“I do think there is scope for some further easing of policy during most probably the course of this year,” he said. “At the moment – we’re still a little way off the next meeting – it is a genuinely open question.”

• However, this outlook has changed significantly since the outbreak of the US-Israel war with Iran, which has pushed oil and gas prices higher, increasing inflation risk and affecting the UK interest rate outlook.
• Expectations of what may happen next are changing frequently. On 10 March, Bloomberg’s John Stepek explained:

“Interest rate expectations have fluctuated alongside the oil price. When markets opened yesterday, traders had gone from expecting the Bank of England to cut interest rates, to actually betting on rate hikes this year. Now we’re back to at least one cut being seen as more likely.”

• Analysts at Deutsche Bank have predicted that UK inflation would increase to nearly 4% by the end of 2026, double the Bank of England’s 2% target, if there was no swift conclusion to the war in the Middle East and energy prices remained high.
• Chancellor Rachel Reeves has warned the conflict in Iran is “likely to put upward pressure on inflation” over the coming months.
• While Tom Bill, head of UK residential research at Knight Frank, says: “A prolonged conflict in the Middle East would dampen sentiment and delay rate cuts due to rising inflation, which would put downwards pressure on prices. 

“That said, we have seen how quickly interest rate expectations can change this year, and the underlying weakness in the jobs market is one of several reasons that multiple cuts could come back onto the table in 2026. A lot hinges on the length of the conflict.”

Economists’ interest rate predictions

Interest rate predictions are notoriously difficult at the best of times, but the complexity of the current situation in the Middle East makes it even harder.

On the one side, some experts predict interest rates may still be cut twice this year. While at the other end of the spectrum, some experts predict interest rates could increase:

Forecasts suggesting interest rates could increase:

• National Institute of Economic and Social Research predicts that if the current rise in energy costs were to last for a year, interest rates could climb to 4.5%. The think tank modelled the impact of oil and gas prices increasing by 30% and 50% respectively over one year. This would stoke inflation in 2026 and into 2027 and propel the base rate to 4.5%, it said. This is based on rates staying at 3.75% rather than falling as expected this year.
• Ben Zaranko, a director at the Institute for Fiscal Studies, said an interest rate rise above 4% from its current rate of 3.75% could not be ruled out, given markets had all but dismissed the possibility of a cut this month, City AM reports. 

Forecasts suggesting interest rates may go down:

• Sanjay Raja, chief UK economist at Deutsche Bank, outlines three scenarios. In short: if the war is over quickly and energy prices decline again, there will be two Bank rate cuts this year. If energy prices stay at the same level, you might get two rate cuts, but the second will be at the year-end. If oil goes above $100 a barrel, there will be just one cut, and not until the second half of 2026.

• Bloomberg’s John Stepek explains: “This doesn’t sound dramatic but if interest rates remain higher than expected, that will remove at least two key hoped-for tailwinds that would have spelled good news for the UK economy this year.”
• ING’s James Smith says: “UK inflation could peak at 3.5% this year if energy prices stay around current levels into the second quarter. We now expect the next Bank of England cut in April, though March is still a distinct possibility if Middle Eastern tensions rapidly de-escalate. With the jobs market still under pressure, further easing is still more likely than not.”
• Oxford Economics said in a note to clients: “If energy prices quickly decrease, the MPC may resume easing in April or June, aligning with our forecast for one more rate cut by the end of Q2. Additional increases in oil prices could lead to a more prolonged pause. However, considering the policy rate is still in restrictive territory, the MPC is unlikely to hike unless inflation expectations rise significantly.”

Forecasts suggesting interest rates may stay the same

• Sylwia Hubar, a UK economist at banking group Natixis, said: “Significant risks persist, particularly from the Middle East conflict. Should this conflict continue, potentially fuelling inflation while adversely affecting economic growth, the Bank of England may ultimately keep the Bank Rate unchanged this year.”
• Dutch bank Rabobank meanwhile said it did not forecast any other interest rate cuts this year as higher oil prices would “feed through quickly” in UK inflation. 

However, what happens with interest rates in 2026 will depend on numerous factors. You can keep up to date by bookmarking our guide to best mortgage rates in the UK or signing up to our weekly newsletter.

Why did the Bank of England hold interest rates on 5 February?

• The Bank of England held interest rates at 3.75% on 5 February as policymakers continue to battle sticky inflation.
• However, while the Bank was widely expected to hold rates, the vote was much narrower than City analysts predicted. The majority of five members voted to hold rates, while four voted to cut rates to 3.50%.
• At the time, the Bank signalled that further cuts were now ‘likely’ later in the year, with inflation predicted to fall back to its 2% target faster than expected.
• Mr Bailey said the expected decline in inflation was ‘good news’, however he added that the Bank had to leave rates unchanged to ‘make sure that [it] stays there’.

‘All going well, there should be scope for some further reduction in Bank Rate this year,’ he added.

• At the time, some analysts suggested the next interest rate cut could come as soon as March or April. However, as we explain above, these predictions are now considered much less likely.

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When did the Bank of England last cut interest rates?

• The Bank of England last cut UK interest rates in December 2025 to their lowest level in almost three years, marking the sixth interest rate cut since rates peaked in 2024, in an attempt to stimulate the economy.
• In light of the weakening jobs market and falling inflation, the central bank lowered interest rates from 4% to 3.75%, in a move that was widely expected.
• The Bank’s Monetary Policy Committee voted 5-4 to lower rates by a quarter point, with four members voting to hold interest rates at 4%, pointing to continued concerns about inflation.
• The cut came in a week that saw the UK unemployment rate hit its highest in almost five years, while inflation figures for November fell lower than expected to 3.2%.
• At its previous meeting on 6 November 2025, the MPC held interest rates at 4%. That decision was also a narrow one, with the vote split 5-4 in favour of a hold, rather than cutting interest rates to 3.75%.
• Prior to December, the most recent interest rate cut was on 7 August 2025, when the Bank cut interest rates from 4.25% to 4%, which was then the fifth interest rate cut in a year. The decision was narrowly passed by a 5–4 split vote, with one member initially pushing for a larger 0.5 percentage‑point reduction. The result was a much closer call than predicted.

• That move followed cuts in May 2025, February 2025, November 2024 and August 2024, when the base rate was first cut from 5.25%.

What are interest rates and why do they change?

• The Bank of England’s base rate acts as a benchmark for the cost of borrowing money. As a general rule, when interest rates increase, so does the cost of borrowing on mortgages and other types of borrowing.
• One major reason why the Bank moves rates up and down is to help control inflation. When inflation is high, the Bank may increase interest rates to try to bring it down by encouraging people to spend less and reduce demand. And once inflation is at or near its target, the Bank may hold or cut interest rates.
• However, the Bank’s Monetary Policy Committee will assess a range of factors when deciding whether to cut interest rates including job and wages data and external factors that can impact the economy.

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What’s happening with the UK inflation rate?

• The latest official data, released in February 2026, showed the UK inflation rate (measured by CPI) fell to 3% in January, down from 3.4% in December. This was in line with what had been forecast.
• CPIH, which includes owner‑occupiers’ housing costs, stood at 3.2%, while RPI inflation came in at 3.8%.

• The OBR said in its economic and fiscal outlook for November 2025 that it expects consumer price index (CPI) inflation to average 3.5% in 2025, up from its forecast of 3.2% in March.
• It then expects CPI inflation to average 2.5% in 2026 – higher than its previous forecast of 2.1% – but anticipates it to fall to an average of 2% in 2027.

When is the Bank of England’s Monetary Policy Committee’s next meeting?

The next Bank of England Monetary Policy Committee meeting is on 19 March 2026. Its subsequent meetings are on 30 April 2026, 18 June 2026 and 30 July 2026. The Bank of England publishes a calendar of future committee meeting dates here.

What does ‘terminal rate’ mean?

The terminal rate for the Bank of England refers to the peak or final level of the Bank Rate in a specific interest rate cycle, reflecting the highest (or lowest, in a cutting cycle) point the central bank brings rates to before holding or reversing.

How do interest rates affect mortgages, loans and savings rates?

How changes in interest rates affect your mortgage

Falling interest rates usually means mortgage rates fall too. Stay up to date with our guide to Mortgage rate predictions.

However, how changes in interest rates affect your mortgage depends on your circumstances:

1. You’re taking out a new mortgage: If you’re shopping around for a new mortgage or want to remortgage, the mortgage rates available should improve if interest rates fall, although this isn’t guaranteed. So make sure you shop around. For the cheapest mortgage rates read our guide to the Best mortgage rates.
2. If you’re on a fixed rate mortgage the amount you’ll pay on your monthly mortgage payments will stay the same during your initial term – usually 2 or 5 years. So your mortgage payments won’t change if the Bank of England base rate goes up or down.
3. You have a tracker mortgage: If you’re one of the estimated 600,000 households on a tracker mortgage deal and interest rates are cut, your mortgage payments will fall as the rate you pay on your mortgage falls and rises in line with the Bank of England base rate.
4. If you’re on a discounted variable rate, you’ll pay a rate that’s lower than the lender’s Standard Variable Rate. If your lender decides to pass on the cut in interest rates, your mortgage payments will fall. But it won’t necessarily pass on all or any of the cut.
5. You’re on your lender’s Standard variable rate (SVR): According to UK Finance, there are around 1.1 million households on their lender’s standard variable rate. If this includes you and your lender decides to reduce its SVR if interest rates fall, the amount you’ll pay will fall. But the lender may not pass on all or any of an interest rate cut. Lenders’ SVRs can be extremely expensive, so check your deal now to see if you can save by remortgaging.

Need to remortgage? Don’t sit around waiting for rates to improve. Our mortgage partners at L&C can find and lock in the best rate now and keep it under review – for free.

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Interest rate changes’ impact on credit cards and loans

Other types of borrowing are affected in a similar way. If interest rates go up, borrowing of any type generally gets more expensive, while when interest rates are cut, borrowing generally gets cheaper. However, this is in general terms as the amount you’ll pay on things like credit cards and loans will depend on a number of factors including your credit history.

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