Monetary Policy Summary and minutes (2026-02-05)

Bank Rate maintained at 3.75% - February 2026 Monetary Policy Summary and Minutes The Bank of England’s Monetary Policy Committee is responsible for making decisions about Bank Rate. Related links Related links Our latest decision explained Monetary Policy Report - February 2026 Monetary Policy Summary and minutes of the Monetary Policy Committee meeting ending on 4 February 2026 (PDF 0.2MB) PDF Close dialog Published on 05 February 2026 Monetary Policy Summary, February 2026 At its meeting ending on 4 February 2026, the Monetary Policy Committee voted by a majority of 5–4 to maintain Bank Rate at 3.75%. Four members voted to reduce Bank Rate by 0.25 percentage points, to 3.5%. Although above the 2% target currently, CPI inflation is expected to fall back to around the target from April, owing to developments in energy prices including from Budget 2025. Reflecting the impact of monetary policy, and consistent with evidence of subdued economic growth and building slack in the labour market, pay growth and services price inflation have generally continued to ease. The risk from greater inflation persistence has continued to become less pronounced, while some risks to inflation from weaker demand and a loosening labour market remain. Monetary policy is being set to ensure that CPI inflation not only reaches 2% but remains sustainably at that level in the medium term, which involves balancing the risks around achieving this. The restrictiveness of policy has fallen as Bank Rate has been reduced by 150 basis points since August 2024. On the basis of the current evidence, Bank Rate is likely to be reduced further. Judgements around further policy easing will become a closer call. The extent and timing of further easing in monetary policy will depend on the evolution of the outlook for inflation. Minutes of the Monetary Policy Committee meeting ending on 4 February 2026 1: Before turning to its immediate policy decision, the Monetary Policy Committee (MPC) discussed key economic developments and its judgements around them, as well as its views on monetary policy strategy. The latest data and analysis underpinning these topics were set out in the accompanying February 2026 Monetary Policy Report. The Committee’s discussions 2: The Committee’s policy discussions at this meeting focused on: the near-term outlook for inflation, and its implications for underlying price and wage pressures; the role of slack in the economy in helping to keep inflation at the target in the medium term; and the appropriate response of monetary policy, taking into account these factors as well as broader strategic considerations. 3: CPI inflation had fallen from 3.8% in September last year to 3.4% in December. Reflecting the impact of monetary policy, wage growth and services price inflation had generally continued to ease, albeit remaining above target-consistent levels. CPI inflation was expected to fall back to around the 2% target from April. This mainly reflected developments in energy prices, including the impact of measures announced in Budget 2025. This near-term outlook was notably lower than had been expected in the November Monetary Policy Report, although there had been less news relative to the MPC’s December meeting. 4: UK import prices were also contributing slightly to the projected decline in CPI inflation this year, including as US tariffs and previous energy price falls were weighing on global export price growth. Uncertainty around the global outlook remained. 5: All members of the Committee continued to stress the importance of inflation not only reaching but remaining sustainably at the 2% target in the medium term. Members had different views on the extent to which the near-term reduction in headline inflation, which predominantly reflected one-off factors, would be sufficient to curb remaining risks of persistence in underlying inflationary pressures. 6: For some members, the prospective reduction in headline inflation, particularly in categories such as energy and food that remained salient for households, could feed through quickly to inflation expectations and lead to continued normalisation of wage and price-setting. These members also pointed to pay settlements in the Agents’ pay survey slowing to 3.4% this year, close to target-consistent levels. However, other members were more concerned about still-elevated inflation expectations and a range of future wage indicators, despite disinflation to date. If such inflationary pressures persisted, monetary policy would need to remain more restrictive to avoid inflation settling above the target in the medium term. Most members put some weight on Bank staff analysis that had found little evidence of structural changes in wage bargaining over the recent period. 7: The extent to which remaining excess domestic inflationary pressures would fall would crucially also be influenced by developments in the labour market and the degree to which economic slack acted against these pressures in the coming years. Underlying GDP growth had remained below estimates of potential, and Agents’ intelligence pointed to a subdued outlook for demand. The labour market had continued to loosen, with the unemployment rate having picked up to just over 5% recently. As a result, the February Report central projection incorporated a slightly wider output gap over the forecast period than had been expected in November. 8: Most members judged that there remained some downside risks around this already weaker outlook, which could widen the output gap further and result in an undershoot in inflation, in the absence of looser monetary policy. Households might remain cautious about spending, with a risk that the saving rate would not fall back as expected. Demand could remain weak and unemployment could increase by more than expected. 9: Other members noted signs of a slowing in the pace of labour market loosening as, for example, vacancies had started to tick up. Weak productivity growth could keep unit labour cost growth elevated and contribute to a narrower output gap than otherwise estimated. And growth in bank lending and broad money had both edged higher, suggesting that monetary policy was not overly restrictive. 10: On balance, the Committee judged that the risk from greater inflation persistence had continued to become less pronounced, while some risks to inflation from weaker demand and a loosening labour market remained. In making this assessment, members had generally been influenced more by new Bank staff analysis, including that published in the February Report, than by the most recent data releases. 11: In considering how monetary policy should be set to balance these risks around inflation settling sustainably at the target, the Committee judged that, on the basis of the current evidence, Bank Rate was likely to be reduced further, although there were different views on the timing and extent. Judgements around further policy easing would become a closer call. With uncertainty around how precisely a neutral level of Bank Rate could be estimated, slowing the pace of further easing could provide space to gain assurance about how the risks were evolving. 12: Across possible inflation scenarios, the MPC considered how well different monetary policy paths could insure against adverse economic outcomes. 13: Some members were most concerned that cutting rates too quickly risked inadvertently making policy too accommodative if inflationary pressures did not recede, and that it might be costly to change course in that event. If downside risks were instead to materialise, Bank Rate could still be reduced faster then. Other members were concerned that holding Bank Rate at a restrictive level for too long could require a sharper adjustment in monetary policy later on. Finding clear evidence that structural changes had occurred in the economy would always take a long time to become evident in the data. And waiting too long to change policy in the meantime could come at the cost of a sharper downturn in activity and a significant undershoot in inflation. 14: The Committee noted that the central projection was conditioned on a market curve that fell slightly in 2026 then sloped upwards thereafter, to around 3¾% in 2029. Instead, the median respondent to the Market Participants Survey expected Bank Rate to fall and eventually settle at 3.25%footnote [1]. Members recognised that the upward slope in market pricing beyond this year, even if it did not solely reflect market expectations of Bank Rate, was providing restriction via firms’ and households’ financing costs. The immediate policy decision 15: The MPC sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. The MPC adopts a medium-term and forward-looking approach to determine the monetary stance required to achieve the inflation target sustainably. 16: Five members (Andrew Bailey, Megan Greene, Clare Lombardelli, Catherine L Mann and Huw Pill) preferred to maintain Bank Rate at 3.75% at this meeting. These members recognised that progress in disinflation had continued. While the lower near-term outlook for inflation was welcome, it remained to be seen how this would pass through into wage and price-setting in the economy. For three members in this group (Megan Greene, Clare Lombardelli and Huw Pill), a more prolonged period of policy restriction was likely to be warranted to mitigate the remaining risks that inflation could settle above the target, but they would continue to assess the evidence. The other two members in this group (Andrew Bailey and Catherine L Mann) had greater confidence that this risk would be mitigated by the lower near-term path for inflation and placed greater emphasis on the risks to inflation from weaker activity, but neither member judged that the weight of evidence was yet sufficient to warrant reducing Bank Rate at this meeting. 17: Four members (Sarah Breeden, Swati