30 April 2026
If you are covering the Bank of England’s decision to hold interest rates at 3.75%, please find below a comment from Lindsay James, investment strategist at Quilter:
“Given inflation hit 3.3% in March and is likely to be on a rising trajectory as higher energy costs and specific shortages bleed into prices across the wider economy, it is no surprise to see the Bank of England choose to hold interest rates where they are. Inflation expectations have already risen sharply and the BoE expects it to remain sticky throughout the year, with the third quarter projection now at 3.3%, 1.4 percentage points higher than at the time of the February Monetary Policy Report.
“UK gilt yields have risen to levels not seen since the global financial crisis, with the 10-year yield now exceeding the psychologically important threshold of 5%, further pressuring government finances and increasing the cost of fresh capital for the wider economy, impacting consumers and businesses alike.
“Whilst the Bank of England has limited tools as its disposal to tackle the enormous collateral damage wrought by incoherent US foreign policy, its response signals that whilst monetary policy can do little to calm the oil price, it can do quite a bit to hurt growth. However, inflation has become one of the biggest economic concerns this decade and as such it will not tolerate what should be a time-limited inflation spike from becoming more deeply engrained in the British psyche.
“This calls for a careful choice of words from the committee which ahead of this meeting the market has translated into between two and three rate hikes by year end. Whether or not that comes to fruition is purely down to events in the Middle East and if the US and Iran can find an off ramp to de-escalate and bring the oil price back down.”
