The BOE held its rate at 3.75% - but it was "hawkish."

The Bank of England's (BOE) Monetary Policy Committee (MPC), at the meeting that ended April 29 with the decision published April 30, held the policy rate (the Bank Rate) at 3.75%. The vote was 8-1. But what is notable is the nature of the dissent. The lone dissenter, Chief Economist Pill, argued not for a cut but for a 0.25% hike.

This is known as a "hawkish hold." Behind it lie rising energy prices tied to Middle East tensions, along with the persistence of wages and services prices. The statement went so far as to say that "CPI could rise further later in the year, and policy needs to guard against the risk of second-round effects on wages and prices." The tone has shifted clearly from the "gradual cuts" path of 2024-25.

Against post-COVID inflation, the BOE hiked 14 times in a row from late 2021. The Bank Rate reached a peak of 5.25% in August 2023. It then pivoted to cuts from August 2024 as inflation slowed, reaching 3.75% in December 2025. Since then it has held for three meetings in a row, pausing partway down the descent.

The easing cycle paused after six cuts (1.5% in total). Markets once expected further cuts during 2026, but amid the risk of resurgent inflation and the hawkish split in the vote, they have instead shifted to pricing in a hike. It is a tricky phase where "up or down next" is hard to read.

The latest April CPI (consumer prices) was +2.8% year-on-year, down from +3.3% in March. It is moving closer to the 2% target, but what the BOE is wary of is the stickiness of services prices. Services CPI, which reflects wage growth, remains high at +3.2%, leaving the risk that inflation does not return fully to target.

Note that the hawkish call at the April meeting was based on the March CPI (+3.3%) available at the time. The April figure released afterward fell to +2.8%, so the data is leaning a little calmer. In the labour market, the unemployment rate has risen to 5.0%, a sign of slowing growth too. The tug-of-war between inflation and the economy continues.

Even among major central banks, the BOE is pursuing aggressive quantitative tightening (QT). What sets it apart is that, rather than simply waiting for maturity, it is actively selling the UK government bonds (gilts) it holds into the market. It plans to cut its holdings by £70bn over the year from October 2025.

Following the hawkish hold, the UK 10-year yield rose above 4.8%, the highest in about half a year. The slack in supply-demand from QT is one factor pushing long-term rates up. Holding rates steady while continuing to tighten on the balance-sheet side - that combined effect is being felt in markets.

Monetary policy is decided by a one-person-one-vote majority of the nine members of the Monetary Policy Committee (MPC). It comprises five from inside the BOE, including the Governor and Deputy Governors, and four external members appointed from outside. Unlike the Fed or ECB, a big distinguishing feature is that each member's vote is published as the vote count.

Because of this transparency, a split vote itself (e.g., 8-1, 5-4) becomes a powerful message. This time the "dissent = hike" shows there are clearly inflation hawks within the committee, reinforcing the market's hawkish read. The minutes are published at the same time, so the substance of the debate can be read too.

The MPC meets eight times a year. At the February, May, August and November meetings, a Monetary Policy Report (MPR) with a detailed economic outlook is published. The most recent decision was April 30. The next is tomorrow, June 18.

Decisions are published at noon UK time alongside the minutes. At tomorrow's June 18 meeting, the focus is how the committee weighs the conflicting signals: upside inflation risk from higher energy prices versus April's slower CPI and the rising unemployment rate.

The pound is one of the major currencies, and BOE rates move the sterling exchange rate. After the hawkish hold, the pound held firm against the dollar and the euro. UK rates are the second highest among major economies after the US, drawing in yield-seeking funds while also weighing on borrowers via mortgages and the like.