Back
Bank of England19 March 2026
Bank Rate held at 3.75% as BoE monitors energy-driven inflation
92
Usefulness score
An official UK Bank of England MPC decision with clear data and a well‑known context, offering highly credible, directly applicable detail for A‑level answers.
Summary
On 19 March 2026, the Bank of England’s MPC kept Bank Rate at 3.75% after six cuts since August 2024. It cited the war in the Middle East raising global energy prices, which will lift UK inflation above earlier expectations in the short term; current CPI inflation is about 3% versus a 2% target. The MPC said it will monitor conditions closely and act to keep inflation on track in the medium term.
Application
How to use this in an exam answer.
Use this as a current UK monetary policy example: quote Bank Rate at 3.75% and CPI at 3% (target 2%) to explain how the MPC responds to a cost‑push energy shock while aiming for price stability. Link to the transmission mechanism (mortgage and loan costs, savings incentives) that cools demand and helps bring inflation down, noting that monetary policy cannot directly lower global energy prices. It also illustrates policy sequencing—six prior cuts followed by a hold—showing cautious balancing of inflation control against growth risks.
Evaluation
How to critically assess it.
Monetary policy is a blunt tool against supply‑side shocks: it cannot reduce imported energy costs, so tightening risks a bigger hit to output and real incomes for limited disinflation. There are long and variable lags (many UK mortgages are fixed), so the near‑term inflation path may not reflect today’s decision. Outcomes hinge on the duration of the Middle East conflict; if energy prices normalise quickly, holding at 3.75% could be tighter than needed, while a prolonged shock might require renewed tightening.