Bank of England set to keep UK interest rates on hold as inflation remains above target

The Bank of England is set to maintain its main interest rate at 3.75% on Thursday, February 5, 2026, in London, as inflation remains above the target rate of 2%. This decision comes amid signs of economic growth picking up, which could potentially put upward pressure on inflation. The central bank has been gradually reducing interest rates over the past 18 months, with the last cut occurring in December. The Bank of England's decision to keep rates unchanged is influenced by recent economic indicators that suggest stronger-than-expected demand and stickier inflation. Economists note that upcoming data will be crucial in determining when the central bank will cut interest rates again. Lower interest rates typically stimulate economic growth by reducing borrowing costs, which can lead to increased consumer spending and business investment. However, this can also contribute to higher prices, necessitating a delicate balance by central bankers to prevent inflation from eroding the value of earnings and savings without stifling economic growth. The Labour government, which won the general election in 2024, has seen a decline in support partly due to economic factors and will be hoping for a sharp drop in inflation to allow for further reductions in borrowing costs.