Bank of England holds interest rates at 3.75%

Bank of England holds interest rates at 3.75%

30 Jul 2026

The Bank of England has held the Bank Rate at 3.75%, in line with market expectations.

Emma Coleman, Head of Credit Research at XPS Group, commented: “While today's Bank of England decision will be significant for many households and businesses, it’s likely to have a limited impact on defined benefit (DB) schemes.

For most DB schemes, funding levels are driven more by movements in long-term government bond yields than by changes in short-term interest rates.

Government bond yields have continued to edge higher this year, as inflation remains above the Bank of England’s target and geopolitical uncertainty persists. Higher yields have generally strengthened DB funding position, but persistent inflation could keep long-term interest rate expectations elevated, with implications for liability hedging strategies.

Markets are also expecting rates to remain on hold as policymakers await greater clarity on the Government's tax and spending plans ahead of the Autumn Budget.

The biggest risk is a sharp move in government bond yields, which can leave pension schemes exposed, especially if their liability hedging data is out of date.”