Interest Rate Cuts 'Off the Table' for 2026, Says Bank of England Governor

Bank of England Governor Andrew Bailey has officially ruled out interest rate cuts for the remainder of 2026, holding the Bank Rate steady at 3.75%. Driven by ongoing geopolitical tensions and stubborn inflation, markets expect rates to remain elevated, leaving average two-year fixed mortgages hovering around 5.07%. [1, 2]

The decision to press pause on rate reductions comes despite earlier expectations and introduces several significant economic factors:

• Inflation Pressures: Inflation sits at 2.8%, but a recent 13.5% spike in the energy price cap is predicted to drive figures higher, with forecasters projecting a peak near 4% by November. [1, 2]
• Committee Divide: Reflecting the hawkish sentiment, two of the seven Monetary Policy Committee members recently voted for a rate hike. [1, 2]
• Market Impact: Mortgage rates have climbed roughly 1% since the pause was initially announced in March, adding a notable burden for property investors and homeowners alike.

The Bank's next official rate announcement is scheduled for 30 July 2026. [1, 2]