Bank of England MPC Votes Unanimously to Maintain Bank Rate at 3.75 Percent Amid Middle East Energy Shock - March 2026

Summary

The Bank of England's MPC voted unanimously 9-0 on March 18, 2026, to maintain Bank Rate at 3.75%, pivoting from the February 5-4 split after Middle East conflict between Israel, the United States, and Iran drove oil prices above $100 per barrel and European wholesale gas prices 60% higher than at the February meeting. Iranian attacks on Strait of Hormuz shipping had nearly halted passage of one-fifth of global oil and LNG supply, sharply reversing the prior disinflation trend.

Market Impact

Brent crude rose above $100 per barrel by March 18, approximately 60% higher than at the February Monetary Policy Report, reaching the highest level since 2022. European wholesale natural gas prices rose around 60% over the same period. The MPC held unanimously due to the energy supply shock, abandoning the February easing trajectory and flagging elevated risk of domestic second-round inflationary effects from higher energy costs in wage and price-setting. The outlook for further Bank Rate reductions became deeply uncertain.

Why It Matters

The unanimous March hold reverses the February 5-4 drift toward easing, showing how rapidly the Middle East conflict disrupted the UK's disinflation path. The near-halt of Strait of Hormuz shipping, through which about one-fifth of global oil and LNG flows, created a commodity price shock directly comparable in magnitude to the 2022 energy crisis.

Key Points

• The MPC voted unanimously 9-0 to hold Bank Rate at 3.75%, a sharp reversal from February's 5-4 split, as Middle East conflict drove a major energy price shock that overrode the prior disinflation trend.
• The Brent crude spot price exceeded $100 per barrel ahead of the March 18 meeting, approximately 60% above the February 2026 Monetary Policy Report level and the highest since 2022; European wholesale gas prices also rose around 60% over the same period.
• Iranian attacks on vessels in the Strait of Hormuz had nearly halted transit of roughly one-fifth of global oil and LNG supply through the strait, triggering sharp price rises and upward pressure on fertiliser and helium prices.
• The MPC warned of elevated risk of domestic second-round inflationary effects in wage and price-setting if higher energy prices persist, while also assessing downside risk to activity from higher energy costs weakening economic growth.
• Monetary policy cannot directly influence global energy prices; the MPC stated it stands ready to act as necessary to ensure CPI inflation remains on track for the 2% medium-term target as the situation in the Middle East evolves.

Key Entities

Evidence

At its meeting ending on 18 March 2026, the Monetary Policy Committee (MPC) voted unanimously to maintain Bank Rate at 3.75%.

Supports: The unanimous 9-0 hold decision at March 18 meeting

The Brent crude spot price in the run-up to the MPC meeting on 18 March had been over $100 per barrel. This was around 60% higher than at the time of the February Report and the highest level since 2022.

Supports: The magnitude of the oil price shock: $100+/barrel, 60% above February levels, highest since 2022

Shipping through the Strait of Hormuz, through which around one-fifth of global oil and liquefied natural gas supply flowed, had almost ground to a halt following some Iranian attacks on vessels attempting transit.

Supports: The supply disruption mechanism: Iranian attacks nearly halting one-fifth of global oil/LNG flows