The Bank of England has kept interest rates at 3.75% in its February 2026 decision, with the vote and accompanying commentary setting the stage for a highly uncertain March meeting. Financial markets see even odds for a cut next month.
The monetary policy committee’s 5-4 vote to hold rates showed how closely divided policymakers are about the appropriate timing for further easing. This narrow margin, following six rate cuts since mid-2024, suggests the March decision could go either way depending on incoming economic data over the next month.
Governor Andrew Bailey explicitly endorsed the market’s 50-50 probability assessment for March, telling Bloomberg TV that “going into March, 50-50 is not a bad place to be.” This unusual candor about the next meeting’s uncertainty reflects genuine indecision among policymakers rather than a clear policy bias.
The economic data that will shape the March decision includes inflation figures for January and February, labor market statistics, and any early evidence of how the government’s April measures are affecting expectations. Bailey projected that inflation would fall to around 2% by spring, but whether this happens as quickly as forecast will heavily influence the March vote.
The Bank forecasts GDP growth of just 0.9% this year, down from 1.2% previously, while unemployment is expected to reach 5.3%. Chancellor Rachel Reeves’s budget measures, including utility bill cuts and rail fare freezes from April, are projected to drive inflation down to 2.1% by mid-2026, compared to 3.4% in December. The combination of weak growth and falling inflation creates conditions favorable for easing, but the committee’s current 5-4 split means the March decision genuinely hangs in the balance.