The central bank is gearing up for its much-anticipated first decision of 2026
The Bank of England is set to make its first interest rate decision of the year today, with the central bank widely expected to announce a rate hold at midday.
Even if the Bank leaves rates unchanged, there will still likely be plenty for mortgage and housing market watchers to digest from the day – particularly in the Monetary Policy Report, scheduled for release at the same time, which could offer valuable clues to how decisionmakers are weighing up the economic and rate outlook for the months ahead.
Concern about a potential inflation uptick is among the main reasons the Bank is expected to leave rates untouched at 3.75%, but markets will also be keeping a close eye on what the Bank has to say about the likely impact on the UK economy of Rachel Reeves’ November budget and Donald Trump’s global tariff war.
While the economy has appeared to strengthen in recent months, unemployment is also on the rise – jumping to its highest level for nearly five years – and the central bank appears to prefer erring on the side of caution as it weighs up its approach for the year ahead.
Borrowers have seen plenty of rate relief since the middle of 2024, with a series of cuts by the BoE bringing its benchmark rate down from 5.25%. But the Bank’s rate-setting governors seem likely to take a more conservative approach to cuts in 2026, even though markets still believe it could cut again as early as June.
For the housing market, that means lower rates could be on the way at some point this year – but for now, it looks like borrowers will have to wait for a while if they want to take advantage of rate cuts.
But homebuying activity has already ticked up at the beginning of the year regardless, with Zoopla’s latest House Price Index reporting strengthened demand in January amid rising consumer confidence and better bargaining power for buyers.
Today's announcement is the first in a series of eight scheduled decisions by the Bank in 2026. Further announcements will take place in March, April, June, July, September, November, and December.
Stay tuned for all of Mortgage Introducer’s coverage of the Bank of England announcement this afternoon.
