Bank of England Sees Holding Rate as Active Tool in Inflation Fight

The Bank of England's decision to hold its bank rate at 3.75% has been described by Deputy Governor Dave Ramsden as an 'active response to the risks to the inflation outlook.'

Ramsden, who voted in favor of holding the rate alongside a six-to-three majority at the Monetary Policy Committee (MPC) meeting this month, stated that he had initially expected interest rates to be cut by at least two percentage points by now. However, due to the outbreak of war in the Middle East, the bank rate has remained steady since a 0.25% cut in December 2025.

Ramsden, who also voted for a 3.5% rate in February before the conflict began, acknowledged that his subsequent votes to maintain the current rate have effectively implemented 'tightening relative to where I thought we might otherwise have been.'

The Deputy Governor emphasized that bank rate is an 'active policy tool' for adjusting monetary policy stance and can be utilized through decisions to either increase or decrease rates. He further clarified that holding the rate steady can also serve as a proactive measure in response to potential inflationary pressures.