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P.ublished 18th June 2026
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Bank Base Rate Held At 3.75%
The Bank of England was widely expected to keep interest rates on hold this month. But the Monetary Policy Committee’s focus has now shifted towards digesting the implications of the US-Iran deal to extend the ceasefire and restore energy flows through the Strait of Hormuz.
For now, the deal does little to change the economic outlook, particularly given that global energy flows are unlikely to return to normal immediately. Inflation is still set to rise meaningfully in the months ahead, reflecting the increase in energy prices since the conflict began. The MPC will be watching closely for signs that this feeds through into more persistent domestic price pressures, particularly wage growth, though a softer labour market should limit those risks.
With uncertainty remaining high and inflation still expected to rise, interest rates are likely to stay on hold for some time yet. Nonetheless, the US-Iran deal reduces the risk of the MPC’s more severe inflation scenario playing out. This makes a renewed rise in interest rates much less likely, even though some of the Committee’s more hawkish members might need more reassurance.
“With tensions seemingly easing in the Middle East – and inflation remaining at 2.8 per cent for May – the backdrop to today’s Monetary Policy Committee meeting was not as fraught as may have been feared.
“Policymakers have now been handed evidence that inflation is not currently accelerating despite the Middle East energy shock. The picture is still far from rosy, but households can take some relief that the Bank of England has not piled a rate hike onto an already complicated picture.
“July’s higher energy bills have yet to feed through to households, while transport inflation has already jumped sharply on the back of fuel costs. Inflation therefore may yet climb before it falls.
“For households, that means the cost-of-living squeeze isn’t over, even if today’s decision avoids tightening the screw further. Reviewing savings rates, building a financial buffer where possible and considering whether longer-term money could work harder through investing remain sensible steps that individuals may want to consider in the current environment.”
Alex Beavis
Bank Base Rate may not be moving, but that doesn’t mean savers can’t give their pots a well-earned boost. Now is the perfect time to take action and ensure your savings are working as hard as possible. That may mean shopping around to find a new home for your hard-earned savings pot, but it will be time well spent - there is a new generation of banks who aren’t interested in gimmicks, and instead deliver the sort of value and common sense savers are looking for.
The gap is stark. With a competitive rate of 4.15%, a saver with £20,000 would earn around £830 in a year versus a typical easy access account paying as little as 1%, which would earn roughly £200 on the same amount – a difference of more than £600 a year. On £10,000, the gap is still around £315 a year; money that savers are leaving on the table.
Savers are increasingly looking beyond familiar high street names and focusing on one simple question: who offers the best value for money? Loyalty rarely attracts a bonus in the savings market, which is why regularly reviewing rates has become an essential financial habit.
With the backdrop of continued inflation worries, it’s crucial for households to fight back by being proactive and boosting their savings balance, even if just by a few pounds each month. The magic of compound interest means that saving on a regular basis, even if only modest amounts, can help you build a substantial savings pot.