Interest base rate stays at 3.75%: what does it mean for you?

The threat of inflation due to the war in Iran put a halt to an expected cut

We’ve taken a look at the thinking behind this latest decision, and whether we’re likely to see any cuts in 2026 – or even an increase.

Some articles on the site contain affiliate links, which provide a small commission to help fund our work. However, they won’t affect the price you pay or our editorial independence. Read more here.

What is the current Bank of England base rate?

The interest rate set by the Bank of England (BoE) is known as the base rate.

The current rate was decided on 19 March 2026, remaining at 3.75%. Unlike recent meetings where it’s been a very close decision, this one was unanimous.

It means the base rate remains close to it’s lowest rate in three years. It sat at 3.5% in December 2022, before rising to 4% in February 2023.

Will interest rates rise or fall in 2026?

The reason behind the base rate increases over recent years was to bring down high inflation (we’ve explained this in more detail below). As inflation fell closer to the Bank’s target of 2%, so did the base rate.

We had four cuts to the base rate last year, a drop from 4.75% to 3.75%, and up until a few weeks ago it was almost certain we’d see the first cut of 2026 this week and another later in the year.

But then the conflict in the Middle East began, and that has pushed oil prices up, meaning higher fuel and energy costs are here or on the way. That will drive inflation rates up, as will higher costs on everything from food to travel that will come as a result of more expensive oil. The question is for how long and by how much?

There’s no answer to this right now, so the BofE committee chose to axe the predicted cut, and keep the rate where it is. Instead it’s about waiting to see how things develop, and at the next meeting in six weeks, the Bank believe they’ll have a better idea of the potential impact.

So is it just a delay to the one or two cuts that were anticipated in 2026? Probably not. It’s more likely there won’t be any reductions this year. And there could even be an increase to the base rate.

Indeed, that’s what the markets were pricing in ahead of today’s meeting – a move back to 4%, potentially as soon as in June. Since the announcement another is also looking likely, in September.

The Bank expects inflation to be around 3.5% this summer, rather than the hoped for 2.1%. Analysts were predicting it could possibly go as high as 4% buy the end of the year.

But this is all speculation. If the war ends shortly we might not see as much impact on prices. If it drags on, then the situation could be worse than the current forecasts.

Featured switching deal

Our top pick

Santander £200 switch offer + £25 Amazon Gift Card

Customer rating 3.8/5

• Switch bonus

  £200
• Offer ends

  Unknown
• Extra bonus

  £25 Amazon Gift Card

• FSCS Protected? Yes
• Switch bonus requirements Switch using the Current Account Switch Service and close your old account within 60 days of starting the switch
• Deposit requirements Deposit £1,500 in the first 60 days from opening the account
• Direct debits transferred over Set up two Direct Debits before or after the switch from a selected list of household bills
• Existing customers? Can't have held any Santander current account on 1 January 2025
• Restrictions Can't have received a switching bonus from Santander already, offer limited to once per person
• Eligible accounts Open a new or hold an existing Everyday, Edge, Edge Up or Edge Explorer current account
• £25 Amazon Gift Card requirements To qualify for the gift card, you need to complete a full switch using CASS, and make five debit card transactions within 30 days of opening the account.

View Deal

When is the next interest rate decision?

The rate is set every six weeks or so by the Bank of England Monetary Policy Committee, a group of nine people, with the majority vote deciding whether the rate goes up, down or stays the same.

The next meetings this year will be on:

• 30 April 2026
• 18 June 2026
• 30 July 2026
• 17 September 2026
• 5 November 2026
• 17 December 2026

(full dates here).

The base rate and inflation

The driver for changing the base rate right now is inflation, which has been higher than wanted most of the time since late 2021.

Increasing interest rates is seen as the key (perhaps only) way to battle inflation, the idea being we’ll save more or have more expensive debts (like mortgages), leading to us spending less. This will force suppliers to lower prices, which in turn will see the inflation rate drop (though in most cases that doesn’t mean prices fall, they just get more expensive at a slower rate).

However, those rate hikes take time to filter down and for the inflation rate to – in theory – come under control. And if you keep increasing rates the danger is it pushes the economy into recession and cause hardship for borrowers, particularly those with mortgages.

Likewise if the Bank decides to cut the rate too early, it might not have done enough, leading to a reverse later on.

How the base rate impacts your money

The BoE rate is a large part of what high street and online banks and lenders use to inform the rates they offer. This means it will impact the cost of borrowing on things like mortgages, loans and credit cards, but also how much you can earn on savings.

Sometimes it’s a direct correlation if you have a product with a tracker rate – something that literally changes up or down in line with the BoE rate. In that case you’ll see an instant change.

On other products you might not see an instant change – if at all. So it pays to shop around to see if you can get a better deal.

Get the best of our money saving content every week, straight to your inbox

Plus, new Quidco customers get a high paying £18 welcome offer

Email Address

I agree to receive email updates and promotions.

How the decision impacts your savings

Since a peak in autumn 2023, rates have generally been falling as banks price in both actual and predicted cuts (they’re fast to pass these on, but slow to give us the increases).

With this decision there will be no immediate change to easy access accounts. And if no more cuts happen this year, you’d hope things will stay roughly where they are. However that doesn’t mean banks won’t make changes (up or down), so keep an eye on your accounts, and compare them to our best buy tables to make sure you’re getting a decent rate.

With rumours of an increase, or at least no cuts, the top fixed rates have actually moved up a little in recent weeks. It’s only a little, but it shows some banks think we won’t see as cuts this year.

If you’ve recently locked in and higher rates are available elsewhere, check to see if you’re within a cooling off period that would allow you do take the cash out of a fixed account. However, I doubt rates are that different right now for this to make much of a difference.

The highest-paying savings accounts – our picks

• 6% AER current account from Santander (limited to £4,000 deposit and has monthly fee)
• 7% AER regular saver from First Direct
• 4.68% AER easy access Cash ISA from Trading 212

Read more about these and the other best savings accounts in our best buys guide

The best savings accounts

Check out our list of the highest paying regular, easy-access, fixed and ethical savings accounts

How the decision impacts your mortgage

So no change to the base rate means no change to your mortgage, right? Not quite.

While tracker and standard variable rate (SVR) mortgages rates are directly based on the base rate, on the whole they’re actually influenced by something known as swap rates – effectively where lenders think the rate will be in the future.

In part, that’s why we’ve seen rates drop from major lenders over the last few months. They anticipated a reduction at some point, and reduced rates to reflect this.

But since the airstrikes on Iran, swap rates have started to price in hikes as a result of the new inflation predictions, and as a result, rates for new mortgages have already increased. At the start of the month a two year fix was averaging at 4.83%, according to Moneyfacts. It’s now at 5.32%.

Whether that’s reversed or whether rates carry on going higher will largely be down to how long the conflict continues.

If you’re due to buy or remortgage now, it’s always worth speaking with a mortgage broker who can advise on different strategies – though since no one knows what will happen this still won’t guarantee any savings.

And for anyone who is really struggling to make their repayments, it’s important to talk to your lender to see if anything can be worked out – though bear in mind missing payments can impact your credit report.

If it’s impacting other essential spending, then see whether those companies can support reduced repayments. And if debts have built up, speak to a debt charity.

Compare mortgage rates and deals

Looking for a mortgage? Find the top rates from over 200,000 deals and 100+ lenders with our live tables.

Check out the best mortgage rates

How the base rate has changed

Related Posts:

Is a fixed rate mortgage right for me?

Premium Bond prize rate cut to 3.3%