What does the base rate hold mean for your savings?
The Bank of England has held the base rate at 3.75% for a second consecutive month. Learn what drove the decision and how you can take advantage of this outcome.
This article is not advice. If you would like to receive advice on your savings and investments, consider speaking to a Financial Adviser.
The Bank of England’s Monetary Policy Committee (MPC) kept the base rate at 3.75% today, as policymakers navigate a fast changing economic backdrop shaped by higher energy prices and geopolitical uncertainty.
The MPC was a house united. All nine members voted unanimously to leave the base rate unchanged.
War in the Middle East has pushed up global energy prices. You can already see that at the petrol pump and, if it lasts, it will feed into higher household energy bills later in the year.
Why did the Bank of England hold the base rate?
Energy prices have risen sharply in recent weeks due to the conflict in the Middle East. That pressure makes it harder for inflation to fall toward the Bank’s 2% target.
Chancellor Rachel Reeves recently highlighted this risk. She said the economic impact of the conflict in the Middle East ‘will depend of course on its severity and duration’, and noted that the movements so far are likely to put upward pressure on inflation in the coming months.
The Office for Budget Responsibility added to these concerns. It cautioned that if the current energy price spike continues, UK inflation could rise by around one percentage point this year.
The latest data from the Office for National Statistics shows GDP flatlined in the month to January 2026. Economists had expected a small increase of 0.2%, following growth of 0.1% in December 2025. This adds to the uncertainty around the economic outlook.
With energy prices rising, inflation risks building, and slow economic growth, the Bank decided to delay a base rate cut while it waits for clearer evidence on how these pressures develop.
What does the base rate hold mean for savers?
With the base rate on pause for a further six weeks, savings rates remain resilient across both instant and fixed accounts. There’s still a wide range of competitive options on the market, which gives savers space to make considered choices in a shifting landscape.
Katie Horne, savings expert at Flagstone, comments:
‘It's startling to take in the predictions some economists are making about how the Iran conflict could push inflation higher again. These predictions and ongoing market instability undermined any expectation that the Bank of England might cut the base rate from 3.75%.
‘Savings rates continue to perform strongly with many banks offering inflation-beating returns on instant access and fixed term accounts alike.
‘It's typical to see rates fall slightly in the weeks after the end of ISA season. But the downward trajectory that had been anticipated for the rest of the year is less likely now.’
With borrowing rates heading north again, fuel prices increasing, and the energy price cap expected to rise when it is reset this summer, consumers are understandably bracing for a choppy ride ahead. At times like these, proactively managing your money can pay off.
‘Savvy savers often explore laddered (or staggered) saving techniques. These techniques let them keep some savings handy in high interest instant access accounts, while making the rest work as hard as possible in fixed term accounts where competitive rates are guaranteed for longer.’
Time to wake up your savings?
When cash is left to languish in low-interest accounts, it's savers like you who pay the price. This pause is a prime opportunity to take stock of where your money sits. Loyalty to old accounts often doesn’t pay off, and a quick review of your accounts can show you whether your savings are keeping pace with the wider market.
That’s where Flagstone comes in.
Our platform gives you a simple, secure way to access hundreds of savings accounts from over 65 banks with a minimum deposit of £10,000. You can easily compare, switch, and track the performance of your cash – all in one platform, with one password.
