The Bank of England has held interest rates at 3.75%, a move that had become increasingly likely in recent weeks as geopolitical tensions and rising energy prices unsettled markets. What had looked like a clearer path towards rate cuts has quickly shifted, with policymakers now balancing the risk of higher inflation against a weakening growth backdrop. While headline inflation had been easing, the prospect of oil-driven price pressures has made the Bank more cautious.
For advisers, this keeps the “higher for longer” narrative firmly in play, with growing uncertainty around when cuts might actually arrive, and some even warning they could be pushed well into 2026. So what does this mean for portfolios, income strategies and client conversations? We’ve gathered views from across the industry:
Andrew Zanelli, Head of Technical Engagement at Aberdeen Adviser, said:
“Until recently, the Bank of England was expected to cut rates at today’s meeting but in response to events in the Middle East a hold became the expectation and indicates policymakers are giving themselves time to see how the conflict plays out before deciding what direction rates should take next.
Some consumers are already seeing energy prices and mortgage rates increase and may need to reassess their financial plans as a result. In uncertain moments such as these professional financial planners and advisers can really prove their worth. By speaking to an adviser, consumers can not just understand what’s going on but also consider their choices within a longer- term strategy and make sure their money is working as hard as it possibly can.”
Nick Henshaw, Head of Intermediaries Distribution at Wesleyan, said:
“A rate hold in the current environment might prompt clients to maintain or increase cash holdings. However, inflation concerns haven’t disappeared, and staying too heavily weighted toward cash could mean missing opportunities for meaningful growth.
“This is where advisers add real value – helping them understand the benefits that suitable equity exposure could offer.
“Of course, many clients might, understandably, be concerned about recent market volatility. Smoothed funds could be valuable as a tool to bridge the gap between worry and results. They allow advisers to help clients increase market exposure while cushioning some of the ups and downs of the market – helping ensure portfolios are positioned to deliver good outcomes in terms of both returns and emotional comfort.”
Sarah Pennells, consumer finance specialist at Royal London said:
“The Bank of England’s decision to keep interest rates on hold reflects the uncertain global backdrop. Until recently, a cut had been widely expected, but the conflict in the Middle East has heightened concerns about energy prices and the risk that inflation could stay higher for longer.
“That uncertainty has already fed through into the mortgage market. In the past week or so, hundreds of mortgage deals have been pulled and average rates for fixed mortgages have edged up, making things more difficult for people coming to the end of their current fixed deal or trying to buy their first home. Anyone looking for a new mortgage deal would be well advised to speak to an independent mortgage broker, who can help navigate a fast-changing market and identify mortgages that may not be available directly from lenders.
“Even for the 39% of adults without a mortgage, today’s decision is likely to affect confidence. When interest rate cuts are pushed further into the future, people often become more cautious, reining in spending, holding back on big financial decisions, or prioritising building up a financial buffer in case household costs rise again.
“While interest rates may still fall over time, today’s decision is a reminder that the path down is unlikely to be smooth, and that expectations can change quickly.”
Kevin Brown, savings expert at Scottish Friendly, has commented:
“The world has changed dramatically over the past few weeks, with the situation changing on a daily basis. Therefore, the chance of a movement in interest rates at today’s meeting was always likely to be a long shot.
“But fallout from the tensions in the Middle East is already being felt acutely here in the UK. Rising oil and gas prices have already pushed up swap rates – the main driver of fixed-rate mortgage pricing – and triggered a repricing of mortgage deals.
“Higher costs risk lifting headline inflation in the near term. However, this is largely imported rather than domestically generated, which helps explain why the Bank decided not to move today.
“By holding rates, the Bank is effectively buying time to assess whether these pressures persist, rather than signalling any renewed, definitive shift towards tightening.
“For investors, this kind of environment can be unsettling, but short-term volatility is an inevitable feature of markets, particularly when driven by geopolitical events. Maintaining a long-term perspective and avoiding reactive decisions can be key to building wealth over time.”
Charlie Ambler, Co-Chief Investment Officer, Partner at wealth management firm Saltus, said:
“As the conflict in the Middle East continues to escalate, increased oil prices are poised to push up the headline rate of inflation to near double the Bank of England’s 2% target. This is a direct threat to the Bank’s slow and steady rate cutting cycle, with markets now increasingly pricing in a change of course.
“While rates have been held at 3.75% today, hikes later this year are now being priced in by the market. However, this depends entirely on how long the conflict goes on and oil prices remain elevated. While markets will be looking for reassurance amid this uncertain backdrop, any forward guidance will likely remain cautious.
“The risk of renewed pressure later in 2026 is now front of mind for investors. With both the FTSE 100 and S&P 500 falling sharply over recent days, bond yields rising and ongoing gold price volatility, geopolitics continues to shape asset allocation decisions. However, as long term returns are driven by maintaining diversified exposure to quality assets, the focus should remain firmly on quality and resilience, underpinned by a disciplined approach portfolio construction.”
Isabel Albarran, Investment Officer at TrinityBridge says:
“Today’s Bank of England decision to leave rates unchanged highlights the difficult balancing act facing the Monetary Policy Committee.
“If sustained, the recent surge in energy prices will push up inflation, while simultaneously dragging on economic activity. Typically, the Bank would look through such a surge in inflation, on the basis that it will be transitory, and cut rates to support the economy.
“However, this time, it’s not so clear cut. MPC members will well remember how several “transitory” waves of inflation fomented into a persistent inflation problem in 2022, and inflation expectations are not as well-anchored at 2% as the Bank would like.
“There may be expectations that the Bank will want to avoid an embarrassing repeat of previous missteps, and futures markets are now indicating a hike in September. However, while rate cuts now appear less likely, we think expectations of a hike are overblown. In our view, holding rates steady remains the most probable outcome.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“Once upon a time, a cut at today’s meeting had looked like a sure thing. But given the Iran conflict, it is no surprise that the Bank of England decided to keep policy on hold today. What is striking is that all policymakers voted to keep policy on hold, which shows that even the more dovish members of the committee want to see how this conflict plays out before cutting again. With today’s labour market data showing wage growth is continuing to moderate, there is certainly a strong case for bringing rates down eventually. But with the inflation outlook now looking more challenging, the Bank will be focused on keeping inflation expectations pinned down. So while the hurdle to a return to rate hikes is very high, the economy could be facing a long wait until the next cut.”
Ed Monk, Pensions and Investment Specialist, Fidelity International comments:
“A March interest rate cut has looked doubtful from soon after the conflict in the Middle East broke out. Bond markets have been pricing in a reduced chance of a quarter-point cut since then, and over the past week have been suggesting an increasing chance that the Bank raises rates in the months ahead. That’s a jarring reversal of expectations from where we were just a few weeks ago.
“This will be troubling for households, 1.8m1 of whom are due to reach the end of fixed-rate mortgage deals in 2026 and will be looking for a new home-loans. New mortgage rates were already likely to be higher than their previous deals and now rates in the mortgage market look to be on the rise.
“The Bank’s challenge over the coming months is to assess how far a spike in the headline rate of inflation caused by higher oil and gas prices will feed through to more lasting higher prices.
“Clearly there remains a high degree of uncertainty about the path of the conflict, and by extension expectations for inflation and rates, from here. That uncertainty is playing out in large daily movements for the stock market as well. During such periods it rarely pays to panic. Markets have a track record of making up short-term losses in the longer run so sticking to your plan and continuing regular investments into a diversified mix of assets is likely to pay dividends in the end.”
Mike Ambery, Retirement Savings Director at Standard Life plc said:
“Today’s decision to hold interest rates at 3.75% reflects the Bank of England’s caution in the face of growing global uncertainty. With conflict in the Middle East driving a sharp rise in oil prices, the key question now is how far this feeds through into energy bills and wider inflation. Against this backdrop, a pause is unsurprising.
“Only weeks ago, markets were increasingly confident that inflation was on a downward path and that further rate cuts could follow. However, the escalation of tensions involving Iran has clouded that outlook, raising the risk that inflation proves more persistent. As higher wholesale costs filter through to households, the Bank is likely to remain measured and gradual in its approach when cuts do begin.
“For savers, a higher-for-longer rate environment can offer some support – particularly for those holding cash. However, with inflation risks building, there is a real danger that the value of those savings is eroded in real terms over time. Those saving for the long term should consider tax-efficient options such as pensions and Stocks and Shares ISAs to help their money keep pace with rising prices.
“For borrowers, this decision signals that pressure on household finances may persist. Those on variable or tracker mortgages – or nearing the end of a fixed-rate deal – could face elevated borrowing costs for longer, making it essential to review options early and plan ahead.”
Lindsay James, investment strategist at Quilter:
“A lot has changed since the Bank of England last met at the beginning of February. Today had been earmarked as a good chance of a rate cut given the economic woes blighting the UK. However, things have shifted at such a pace that while rates have been held again today in a unanimous decision, and markets are now expecting rates to be raised by at least quarter of a percent this year if not half of one. This is a swift reversal from the two cuts expected this year before the US and Israeli attacks on Iran and a difficult wake up call for those seeking to remortgage in coming months who have seen lower rates vanish in thin air.
“Inflation forecasts too are being revised hastily, indicating that a spike is coming and as such the BoE will have limited scope to stimulate the already sluggish economy and weakening labour market. Even though a rate hike will do nothing to cool the heat of war in the Gulf, memories persist of the aftermath of the 2022 energy shock which saw higher inflation expectations take root, setting off a chain of events with CPI peaking at 11.1% and levels of wage inflation still receding today. The BoE will very much not want that history to repeat itself.
“However, the UK is in a very different position today than it was back then. Interest rates are not at rock bottom, and the ‘transitory’ word isn’t being bandied around this time when it comes to inflation. But this does remain very much a moving picture. Investors still expect oil to be substantially lower within a matter of months, even if the levels in question have seen a step change in recent weeks. Recent attacks on gas fields have quite literally added fuel to the fire, and the longer these rises go on, the more sustained the inflation impact.
“With volatility like this, rate expectations will move yet again before this is over. And we must not also forget the domestic picture. The UK economy is stagnating once more, and with an energy price shock looming for households and employment remaining weak, how much focus does the BoE put on the geopolitical picture when the domestic economy needs help today? It would appear there are concerns about the inflation path with ‘all members standing ready to act’ in order to contain price rises. Interest rates may be held for now, but it seems hikes are likely to be coming.”
Brad Holland, director of investment strategy at J.P. Morgan Personal Investing:
“The Bank of England has held interest rates steady at 3.75% again, marking the first quarter without a rate cut since the spring of 2024. This is a clear slowdown in the Bank’s rate cutting cycle and shows some caution following the conflict in the Middle East over recent weeks.
“The Bank faces a tricky challenge as it tries to interpret the mood music of the global economy after the start of the Iran conflict led to a spike in oil prices. By holding the Bank Rate, this suggests policymakers are keeping their options open as the conflict evolves and the endgame between the US and Iranian regime remains unclear. While it is still early days in the conflict, if the price shock persists and creates an unwanted upward pressure on UK inflation, this could make it harder for the Bank to cut rates further this year.
“Right now, UK economic growth is stuck in a weak funk while wage rises are decelerating and services inflation is moderating. In normal times, this would point to rates drifting toward a more neutral level – nearer 3%. But these are not normal times, and uncertainties about the duration of elevated energy prices and their impact on growth and inflation have heightened concerns around the direction of the UK economy. The usual playbook may be abandoned soon.”
Charlotte Kennedy, Chartered Financial Planner at Rathbones, says:
“There’s no doubt the situation in Iran has shifted the landscape. The economic backdrop was already challenging, and the conflict has simply raised the stakes.
“Only a few weeks ago, a Bank of England rate cut looked almost certain. Now, with oil and gas prices climbing and inflation risks rising – with the Bank bracing for a ‘shock’ to the economy – policymakers have opted to hold steady. With the economy struggling to generate meaningful growth and the labour market looking softer, the Bank faces the difficult task of supporting domestic activity while managing geopolitical inflation pressures.
“Even though the base rate hasn’t moved, mortgage rates have crept higher in recent weeks. Swap rates, which reflect where markets think borrowing costs are heading and help determine the pricing of home loans, have risen again. Their direction from here will influenced by how the Iran conflict evolves.
“Borrowers approaching the end of a fixed rate mortgage may benefit from locking in a new deal early. Many lenders allow mortgage offers to remain valid for up to six months, giving households the option to secure a rate now while retaining the flexibility to switch if a better deal emerges.
“For savers, the delay to interest rate cuts may mean savings rates fall more slowly. But the key is to focus on the real return – what your money is earning after inflation – not just the headline interest rate. If higher energy prices feed into broader inflation, the purchasing power of cash could still be eroded, even if interest rates remain elevated. For those with the financial means and a long-term horizon, investing offers the potential for returns that outpace both inflation and savings rates over time.”
Danni Hewson, head of financial analysis at AJ Bell, comments:
“The last time the Bank of England’s MPC members voted unanimously was during the Covid pandemic, and today’s decision once again illustrates the impact global instability can have on the UK economy.
“A few weeks ago, inflation had been expected to fall back to the Bank’s 2% target this spring. Now rising energy prices are already being felt by the consumer, with the cost of filling up at the pump the first indication of what could become a significant economic shock.
“Households are acutely aware of the impact rising inflation can have on living standards and headlines about today’s significant oil price jump could undermine confidence and push people to pad out their emergency funds rather than splurge on a new sofa or meal out.
“Whilst central banks can’t influence energy prices, they do have the power to nudge the economy through increased borrowing costs which seek to prevent the kind of inflation busting pay rises that workers were demanding during the last inflationary cycle.
“There has been criticism that the Bank of England didn’t act quickly enough to stop the secondary impact of the last energy price shock, though it was the first major central bank to begin to tighten policy. But the economic climate in 2026 is very different from the one in 2021, when the country was powering back up after a series of lockdowns and post pandemic hiring was still racing towards its peak.
“Governor Andrew Bailey said the Bank stands ‘ready to act’, with MPC members in agreement that the next six weeks could shed light on the scale and likely duration of the conflict.
“Lenders have already started to make moves and mortgage rates have been ticking up. Markets are now pricing in an almost 50% chance that April’s meeting will see rates rise to 4% with the potential for two additional rate hikes by the end of the year.
“But no one has a crystal ball. No one knows how long the conflict will last or the amount of damage that could be inflicted on crucial energy infrastructure by the time it ends.”
Chris Cheverall, Head of UK, CMC Markets, notes:
“Before the outbreak of the war, inflation was expected to fall closer to the 2% CPI target. While the conflict in the Middle East may not be the primary driver of the decision to hold interest rates at 3.75%, tensions in the region are a consideration thanks to the sustained rise in oil and gas prices and increased uncertainty.
“The Bank of England’s decision to hold rates had been anticipated and perhaps reflects a cautiously optimistic assessment of the UK growth outlook. Holding rates suggests the continuation of a more balanced approach, underscoring the view that policy is now firmly in restrictive territory, while avoiding the risk of overtightening into a weakening macroeconomic backdrop.
“By holding steady at 3.75%, the MPC is choosing to maintain a firm stance and buy time to avoid overreacting to short-term data.
“Market focus now turns to the coming months, and what the eventual impact of the conflict and resulting energy crisis will be.”
Guy Foster, chief strategist at RBC Brewin Dolphin said:
“It was no surprise that rates were kept on hold today. The fact that the committee reached a unanimous decision for the first time in years is understandable given the level of uncertainty in the inflationary outlook at the moment. Today’s decision ends a period of silence from the committee which has coincided with most of the conflict and the market reaction reflects the need to assimilate a lot of new information quickly. Price shocks caused by conflicts can be disinflationary because they usually negatively impact growth before being resolved, at which point they weigh down on inflation. However, with inflation persistently above target and energy prices predicted to rise to an unknown extent for an unknown period, it makes it difficult for the MPC to project anything other than vigilance.”
Tim Grimsditch, Managing Director at Unbiased, comments:
“The expected decision to hold the base rate at 3.75% offers some breathing space for savers, but it will be frustrating for borrowers who were hoping for relief.
“That said, the constant speculation around Bank of England decisions can become a distraction. What really matters is not letting the headlines knock you off course when it comes to your long-term financial security.
“Whether rates are held, cut, or raised, the foundations of a good financial plan don’t change. The more important question isn’t what the Bank did today, but whether your plans still stack up for the next five, ten, or twenty years.
“It’s understandable to feel tempted to react to the latest news around mortgages, savings, or investments. But knee-jerk decisions rarely work out well. A clear, long-term plan, supported by a qualified financial adviser, helps people cut through the noise and stay focused on what they can control.”
David Roberts, Head of Fixed Income at Nedgroup Investments:
“I’m surprised at the tone of the MPC comments – an incredibly “hawkish” hold. The market moved to price three rate hikes, which seems too much. If the intention of the Bank was to scare markets into raising the cost of finance for U.K. plc, they could hardly have done a better job
“It’s yet another reminder of the dangers posed to those focusing solely on the domestic market as gilt yields surge both in outright terms and relative to Germany, Japan and the US.”
David Roberts, Head of Fixed Income at Nedgroup Investments:
“I’m surprised at the tone of the MPC comments – an incredibly “hawkish” hold. The market moved to price three rate hikes, which seems too much. If the intention of the Bank was to scare markets into raising the cost of finance for U.K. plc, they could hardly have done a better job
“It’s yet another reminder of the dangers posed to those focusing solely on the domestic market as gilt yields surge both in outright terms and relative to Germany, Japan and the US.”
