Bank of England Interest Rate Decision May 2026: MPC Vote and Forward Guidance
TL;DR: The Bank of England Monetary Policy Committee voted 6-3 on 8 May 2026 to hold Bank Rate at 4.50%. Three members voted for a 0.25% cut. The accompanying Monetary Policy Report projected CPI inflation returning to 2.0% target by Q2 2027. Markets priced in approximately 70% probability of a further 0.25% cut at the August 2026 meeting (overnight index swaps, 8 May 2026).
May 2026 MPC Vote Breakdown
| Outcome | Votes | Members |
|---|---|---|
| Hold at 4.50% | 6 | Bailey (Governor), Lombardelli (Deputy Gov for Monetary Policy), Greene, Mann, Pill, Ramsden |
| Cut by 0.25% | 3 | Dhingra, Taylor, Breeden |
| Cut by 0.50% | 0 | None |
| Hike | 0 | None |
Vote details from Bank of England Monetary Policy Summary, 8 May 2026 publication. The 6-3 split represents a more dovish balance than the November 2025 (8-1) and February 2026 (7-2) decisions, indicating gradual movement toward the next cut.
Why the Hold Decision and What the Statement Said
The MPC majority cited services inflation remaining above 4% as the primary reason for caution. CPI services inflation stood at 4.1% in the year to March 2026 (ONS, May 2026 release), down from 4.8% at the start of the year but still above the level consistent with 2% headline CPI in the medium term.
The MPC's accompanying Monetary Policy Report projected: headline CPI declining from 2.4% (March 2026) to 2.0% by Q2 2027; GDP growth of 1.1% in 2026 and 1.4% in 2027; unemployment rising slightly from 4.5% to 4.7% by year-end. The Committee retained "Bank Rate will need to remain restrictive for an extended period" language that has been present since November 2024.
Market Reaction and Implied Path
Sterling rose 0.3% against the US dollar on the announcement, reflecting the slightly more hawkish-than-expected vote split. The 2-year gilt yield rose 4 basis points to 3.92%; the 10-year gilt held at 4.18%. SONIA-based overnight index swaps priced approximately 70% probability of a 0.25% cut at the 7 August 2026 MPC meeting and 95% probability of a cut by November 2026.
Mortgage swap markets reacted modestly: 5-year SONIA swap moved from 3.89% to 3.92%. This suggests minimal immediate change in fixed-rate mortgage pricing in the days following the announcement, though sustained moves would feed through over 2-4 weeks as lenders reprice.
Implications for Mortgages, Savings, and Borrowing
For tracker mortgages and SVRs (which follow base rate), the May 2026 hold means no immediate change. The average 2-year tracker holds at base rate plus 0.28% = 4.78%; SVR averages 7.84%. Fixed-rate products are priced from swap rates, not base rate directly, so fixed-rate movement will follow the August 2026 meeting expectations rather than this hold.
Savings rates have been declining slowly through 2025-26 as banks have anticipated cuts. Top easy-access rates (Trading 212 5.00%, Atom Bank 4.92%, Monzo 4.85%) are unlikely to fall further in May-June 2026 but face downward pressure if August produces the expected cut.
FAQ: BoE Rate Decision May 2026
When is the next Bank of England rate decision?
The next scheduled Monetary Policy Committee meeting is on 7 August 2026, with the decision and Monetary Policy Report published at 12:00 BST that day. Subsequent meetings are scheduled for 18 September, 6 November, and 18 December 2026.
How much have rates fallen since the 2023 peak?
Bank Rate peaked at 5.25% (held August 2023 to August 2024). Cuts since then: 0.25% on 1 August 2024 (to 5.00%), 0.25% on 7 November 2024 (to 4.75%), 0.25% on 6 February 2025 (to 4.50% - held since). Cumulative reduction: 0.75% over approximately 21 months.
What was the MPC dissent at May 2026?
Three members (Dhingra, Taylor, Breeden) voted for a 0.25% cut to 4.25%. Their stated reasoning in the Minutes (8 May 2026) emphasised the labour market loosening more than expected and services inflation falling at a faster pace than the central forecast assumed.
Last reviewed: May 2026. Vote counts and projections verified via Bank of England Monetary Policy Summary, Monetary Policy Report, and Minutes published 8 May 2026.
