Bank of England Holds Interest Rates at 5.25% – But for How Long?
- Market News
February 17, 2026 7:46 pm
After months of speculation, the Bank of England has decided to hold interest rates steady at 5.25%, keeping them at their highest level in 16 years. The Monetary Policy Committee voted 6-3 in favor of keeping rates unchanged, with the minority pushing for a cut. Governor Andrew Bailey insists this is the “sensible” choice for now, but let’s be real—nobody expected fireworks at this meeting anyway.
Investors were hoping for at least a hint of a future rate cut, but Bailey stayed tight-lipped. The stock market responded with a shrug, as traders had already priced in a “wait-and-see” approach. However, bond markets are still eyeing a potential rate cut by mid-year, assuming inflation continues to cool down.
The main reason behind the decision? Inflation. While the latest CPI report showed inflation easing to 3%, it’s still above the Bank’s 2% target. Wage growth is also holding up better than expected, which sounds great—until you remember that higher wages can fuel inflation all over again.
Meanwhile, the UK economy isn’t exactly booming. GDP growth remains flat, and consumer spending has slowed as people feel the squeeze from higher mortgage rates and everyday expenses. With government debt mounting and economic uncertainty ahead of the next general election, the Bank is playing a cautious game, waiting for more data before making a move.
So, what does this mean for markets? Stocks have been surprisingly resilient, with the FTSE 100 staying above 7,800 as energy and financial stocks continue to prop it up. However, retail and real estate sectors remain under pressure, as high borrowing costs make life difficult for both businesses and consumers.
For investors, all eyes are now on the next Bank of England meeting in May. If inflation continues to ease, a summer rate cut could be on the cards—which would be a welcome relief for businesses and homeowners alike. Until then, expect more of the same: cautious optimism, nervous traders, and endless speculation about when the first cut will finally come.
