Bank of England Maintains Interest Rate at 3.75%, Signals Caution

The Bank of England's Monetary Policy Committee voted six to three to hold the interest rate steady at 3.75%. The decision comes despite internal disagreements and signals a cautious approach given the inflation outlook and external risks. The bank's forecast indicates inflation peaking around 3.2% by the end of 2026, with a higher trajectory in adverse scenarios exceeding 4%. This suggests the regulator is not yet prepared for aggressive rate hikes but remains open to tightening if economic conditions worsen. Market reactions include a decline in expectations for a rate increase in September, while European equities are supported by stable monetary policy and positive macroeconomic data.