Why did the Bank keep rates at 3.75%?

The MPC held steady because headline inflation should fall near 3.5% in March, but risks from higher oil and gas remain. They want more evidence on persistence in services inflation and wages. Keeping settings unchanged lets them watch data while retaining the option to act quickly if pressures build.

Could the Bank raise rates to 4.25% in 2026?

Markets now price up to two hikes, taking the rate to about 4.25% this year. That path depends on whether the energy price shock lasts and if inflation expectations drift higher. Watch monthly CPI, wage growth, and services inflation. Clear improvement could reduce the need for further tightening.

What does this mean for UK mortgages?

Trackers and SVRs did not change today, but swap rates can lift new fixed-rate offers even without a hike. If you remortgage in 6 to 12 months, shop early, compare fees, and stress-test payments at higher levels. This helps manage risk if the Bank of England interest rate rises.

How should UK investors react now?

Keep liquidity in cash and short gilts, favour companies with strong cash generation and low leverage, and avoid concentrated bets on quick cuts. Review currency hedges on overseas holdings. Revisit risk budgets after each inflation print and MPC update so portfolios stay aligned with the latest macro signals.

Global Market Insights

Bank of England March 20: Holds 3.75%, Flags Hike Risk on Oil Shock

ByDanny Kontos March 20, 2026March 20, 2026

The Bank of England interest rate stayed at 3.75% on 20 March after a unanimous MPC rate decision. Policymakers warned they could raise rates if the Middle East-driven energy price shock endures. The UK inflation forecast now points near 3.5% in March, higher than expected weeks ago. Traders shifted pricing toward up to two increases to 4.25% this year, tightening financial conditions. That means higher gilt yields, a stronger pound, and added pressure on UK shares and mortgages. Below we break down what changed, why it matters, and how UK investors can respond with clear, practical steps.