Bank of England holds interest rates at 3.75%

Bank of England holds interest rates at 3.75%

30 Apr 2026

The Bank of England’s decision to hold the Bank Rate at 3.75% was widely expected but the real‑world impact on pension scheme members will be felt later down the track.

Adam Gillespie, Head of DB Trustee Investment at XPS Group, commented: “It’s not the headline Bank Rate that matters most for pension schemes, but rather how the market prices longer‑term rates and the risk of stagflation. Gilt yields have surged in the last two months, with 20‑year yields this week hitting a 30‑year high of 5.9%, the highest in the G7 and materially above the 2022 LDI-liquidity crisis peak.

Theoretically, higher gilt yields would improve Defined Benefit (DB) funding levels, but for the members the impact is likely to be negative. A high‑yield environment reflects stubborn inflation: CPI is expected to push above 4% and RPI‑linked measures above 5% this year. As such, many DB members could see their annual increases capped. That cap is not an accounting quirk - it is tangible money missing from pensioners’ pockets each month, as bills, food and fuel are expected to rise faster than retirement incomes.

It is clear that the easing cycle that began in August 2024 has stalled, and may remain on hold for the rest of this year.”