Monetary Policy Summary and minutes (2026-03-19)

Bank Rate maintained at 3.75% - March 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 Summary and minutes of the Monetary Policy Committee meeting ending on 18 March 2026 (PDF 0.3MB) PDF Close dialog Published on 19 March 2026 Monetary Policy Summary, March 2026 At its meeting ending on 18 March 2026, the Monetary Policy Committee (MPC) voted unanimously to maintain Bank Rate at 3.75%. Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs. Prior to this, there had been continued disinflation in domestic prices and wages. CPI inflation will be higher in the near term as a result of the new shock to the economy. Monetary policy cannot influence global energy prices but aims to ensure that the economic adjustment to them occurs in a way that achieves the 2% target sustainably. The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, the risk of which will be greater the longer higher energy prices persist. The MPC is also assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs. The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices. It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term. Minutes of the Monetary Policy Committee meeting ending on 18 March 2026 1: Before turning to its immediate policy decision, the Monetary Policy Committee (MPC) discussed recent developments in global economic and financial conditions, the immediate implications for the UK economy, and how these developments could affect the medium-term outlook and the MPC’s strategy. Global economic and financial conditions 1: Since the Committee’s February meeting, the main development had been the outbreak of conflict between Israel and the United States, and Iran. The conflict had spread to other parts of the Middle East, with energy infrastructure targeted. Prior to the conflict, there had otherwise been limited news in the global economy since the February Monetary Policy Report. 2: Shipping through the Strait of Hormuz, through which around one-fifth of global oil and liquefied natural gas supply flowed, had almost ground to a halt following some Iranian attacks on vessels attempting transit. The most significant economic impact of developments in the Strait had been a sharp rise in both the level and volatility of energy prices, alongside upward pressure on a range of other commodity prices, such as fertiliser and heliumfootnote [1] gas. 3: Oil prices had increased significantly since the previous MPC meeting. The Brent crude spot price in the run-up to the MPC meeting on 18 March had been over $100 per barrel. This was around 60% higher than at the time of the February Report and the highest level since 2022, when oil prices had last increased by a comparable magnitude. 4: The Dutch Title Transfer Facility spot price, a measure of European wholesale gas prices, in the run-up to the MPC meeting on 18 March had been over €50 per MWh. This was around 60% higher than its pre-conflict level earlier in the year. Prices of futures contracts for UK natural gas, which would feed into the next Ofgem price cap for July to September, had increased on average by 35 to 40%. While the recent increase in wholesale gas prices had been substantial, prices had remained well below the peaks they had eventually reached in the period following Russia’s invasion of Ukraine in 2022. 5: The negative impact of the closure of the Strait of Hormuz on global oil supply would only be partially offset by the announcement of a coordinated release of strategic oil reserves by the member countries of the International Energy Agency. These reserves would likely be made available to the market over a period of several weeks and would take time to be transported to refineries. 6: It remained to be seen how long the conflict would last. The duration of the reduced supply of energy from the Middle East was therefore uncertain. Notwithstanding that uncertainty, intelligence from market participants suggested that their central expectation was for a relatively short-lived conflict. In that context, members noted upside risks to oil and gas prices looking ahead. Energy supply would take time to recover even if the conflict abated. Efforts to rebuild stocks, as well as greater awareness of vulnerabilities in the global energy network, could sustain higher oil and gas prices. Distributions implied by financial market options also suggested that upside risks to oil and gas prices had increased significantly, at least over the next few months. 7: The conflict had generally led to increased volatility and a deterioration in risk sentiment in financial markets relative to the Committee’s previous meeting. Equity prices across advanced economies had fallen back since the conflict began. UK equity prices were overall little changed since the February Report, having increased ahead of the outbreak of hostilities before declining thereafter. Spreads on investment-grade and high-yield corporate bonds had widened since the conflict began. The sterling effective exchange rate index was little changed since the February Report, while the US dollar had strengthened somewhat. 8: The market-implied path for Bank Rate had increased significantly since the February Report. Alongside developments in other asset prices, this meant that overall financial conditions had tightened. A large majority of responses to the Bank’s latest Market Participants Survey, which had been submitted between 4 and 6 March, expected no change in Bank Rate at this meeting, similar to market pricing. Beyond the near term, the latest market-implied path for Bank Rate sloped slightly upwards over 2026. Market intelligence gathered by Bank staff emphasised that market participants were recalibrating the balance of risks to the path for Bank Rate in light of the rise in energy prices. In the run-up to this MPC meeting, the market-implied path for ECB policy rates had suggested some tightening this year. The path for US policy rates had suggested some loosening, albeit less so than prior to the outbreak of the conflict. 9: The US Supreme Court ruling in relation to the International Emergency Economic Powers Act (IEEPA) had led the US administration to replace previously imposed IEEPA tariffs with a new temporary, uniform 10% tariff on all trade partners under alternative authority. While the direct macroeconomic implications for the UK of the lower US effective tariff rate appeared small, uncertainty around the medium-term outlook for US trade policy had increased somewhat, though remaining well below levels seen in 2025. UK current economic conditions 10: There had been only limited news in the near-term domestic outlook prior to the Middle East conflict. Twelve-month UK CPI inflation had fallen to 3.0% in January from 3.4% in December. This was 0.1 percentage points above the short-term forecast published in the February Report, largely due to a smaller-than-expected fall in services inflation. Services consumer price inflation had been 4.4% in January, 0.2 percentage points above the February Report forecast. Higher frequency measures of underlying services inflation had picked up a little. In light of this data news, CPI inflation was now expected to be a little over 3% in February. 11: Volatility in oil and gas prices had made the short-term outlook for inflation particularly uncertain, but recent increases in energy prices would delay the return of CPI inflation to the 2% target that had been expected at the time of the February Report. The immediate effect would be through higher fuel prices. Based on energy prices as of close of business on 16 March, CPI inflation was now expected to be close to 3½% in March, almost ½ percentage point higher than expected in the February Report. 12: CPI inflation had previously been projected to fall in 2026 Q2, as previous one-off price increases in April 2025 dropped out of the year-on-year comparison alongside the disinflationary effect of the 2025 Budget. Given higher fuel prices, the decline between Q1 and Q2 was now projected to be modest. CPI inflation was expected to be around 3% in Q2 rather than 2.1% in the February Report. 13: Higher wholesale gas prices would have minimal impact on household utility bills in the near term because the Ofgem price cap for April to June had already been determined. However, if current wholesale conditions persisted, they were likely to feed through mechanically into a higher price cap from July. Based on the oil and gas futures curves as of 16 March, Bank staff projections suggested that the direct contribution of energy prices to CPI inflation in 2026 Q3 would be around ¾ percentage points. 14: If they were to occur quickly, indirect effects from firms passing on higher energy costs to consumer prices could further push up CPI inflation by around ¼ percentage point in 2026 Q3. The eventual scale and timing of such indirect effects was uncertain. Taken together with the expected direct effects, and conditioned on energy prices in the run-up to this meeting, CPI inflation could increase to up to 3½% in Q3. 15: It was too early to judge how large any second-round effects from the new energy price shock would be through wage and price-setting. Prior to recent developments in energy prices, annual growth in private sector regular Average Weekly Earnings in the three months to January had been 3.3%, below the forecast in the February Repor