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

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

• The outlook for whether the Bank of England will cut interest rates on 19 March is far from certain, but futures markets now assign a 65% chance of a rate cut.

• By contrast, before the Bank’s most recent decision on 5 February to hold rates at 3.75%, April was the most likely month.

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%.
• The Bank has signalled that further cuts are now ‘likely’ later in the year, with inflation predicted to fall back to its 2% target faster than expected.
• Measures in the autumn Budget are anticipated to ‘weigh’ on inflation in the first half of 2026 and help to reduce it to 2.1% in the spring, from 3.4%.
• Bank of England Governor Andrew 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.

• Speaking at a press conference after the announcement, the governor said the Bank expects to hit the 2% inflation target a year earlier than expected.

• Experts have commented that the closeness of the vote and an apparent hardening of the Bank’s language suggests the next interest rate cut could come as soon as March or April.

Economists’ interest rate predictions

Reaction from economists and investment banks to February’s MPC meeting was mixed. While some focused on the ongoing cautious tone from the Bank and split among rate setters, others sensed a shift of emphasis in the messaging:

• Bank of America analysts highlighted March as the likely month for the next cut, followed by June. “We now feel more confident about our call that the BoE is likely to cut twice this year, vs. the upside risks we were highlighting before,” they said.
• “Given the lag in disinflation and easing cycle in the UK, we think the bar for BoE to hike in 2027 is still very high,” the analysts added.
• ING said February’s close vote “unquestionably boosts the chances of a March rate cut, which is a bit of a surprise”. It added: “Our base case is unchanged. We expect cuts in March and June, taking rates down to 3.25%.”
• UBS expects two cuts this year, in March and June, bringing interest rates down to 3.50% and then 3.25%.
• Morgan Stanley predicts the Bank of England will deliver its next interest rate cut in March. It then expects the Bank to cut interest rates in July and November.
• Economists at Capital Economics forecast interest rates will be cut from 3.75% to 3% in 2026. It forecasts inflation will fall to the Bank of England’s 2% target by the end of 2026, which would be a bigger and faster fall than expected. It also expects the unemployment rate to rise further to a peak of 5.2% in early 2026.
• HSBC’s interest rate prediction is that the base rate will fall to 3% by the end of 2026.
• Deutsche Bank’s chief UK economist Sanjay Raja, told clients: “We stick to our long-standing call of two more rate cuts in 2026: one in March, and one in June, taking Bank Rate to 3.25%. Risks are skewed to a slower but deeper easing cycle.”

• That said, not everyone expects two or three cuts: Barclays, NatWest, Nomura and Pantheon Macroeconomics are predicting just one interest rate cut this year.

However, the pace and extent of interest rate cuts in 2026 will depend on how inflation, wage growth and the wider economy perform.

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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.

Keep on top of mortgage rates with our mortgage finder and rate check service:

What’s happening with inflation?

• Official government figures released in January 2026 showed that CPI inflation in December increased to 3.4%, from the reading of 3.2% for November. This was a bigger increase than expected; City economists had forecast a modest increase to 3.3%.
• CPIH, which includes owner‑occupiers’ housing costs, stood at 3.6%, while RPI inflation came in at 4.2%.

• 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.
• In January 2026, a separate report from the Bank concluded that it had consistently underestimated the full effects of inflation that followed the energy price shock of 2022 due to Russia’s invasion of Ukraine.
• “After 2022, the Bank’s medium-term inflation and wage growth forecasts proved repeatedly too low,” the Bank said.
• The Bank said it would try to improve its “modelling and understanding of key economic mechanisms, including the labour market, wage-price interactions and inflation expectations” to better understand the recent “inflation persistence”.

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 interest rates go 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.

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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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