Bank of England Held Rates at 3.75% in March — But the Committee Is Quietly Divided on Inflation

That sounds like consensus. It wasn't.

According to reporting by The Telegraph, the February MPC vote was 5-4 — four members actively pushed for a rate cut. Then a war-driven surge in oil and gas prices hit. Suddenly everyone voted to hold. Not because they agreed on the inflation outlook. Because a geopolitical shock forced them to stop and recalibrate.

Who Said What

The Telegraph's reporting on the March minutes reveals significant disagreement among committee members.

Deputy Governor Dave Ramsden said that absent the energy shock, the data broadly matched his expectations for continuing disinflation — and he would have voted for a 25 basis point cut. Deputy Governor Sarah Breeden said the same: she would have expected to vote for a cut if not for the shock. External member Alan Taylor said the disinflation process had been "nearly complete" before Middle East events "perturbed" the near-term environment.

Those three essentially said the war interrupted a finished job.

Then there's the other camp.

Deputy Governor for Monetary Policy Clare Lombardelli warned the conflict would raise inflation AND reduce output — not just through fuel and utility costs, but through second-round effects on wages, pricing behavior, and supply chains. External member Megan Greene said the risk of inflation persistence had risen "perhaps significantly" because of the negative supply shock. External member Catherine Mann flagged sustained pressure on energy prices as a real threat.

Same vote. Two completely different reads on where the economy is headed.

What the Bank of England's Own Research Admits

In a paper published October 17, 2025, Bank of England staff — Pavandeep Dhami, Mike Goldby, Clare Macallan, Ben Nelson, Matt Tong, and Danny Walker — laid out the official position: monetary policymaking is now operating in a fundamentally more uncertain environment.

The paper states directly that "uncertainty has risen in recent years, driven in part by unprecedented shocks and structural change" and that "there is no mechanical link between any particular form of analysis and the right policy decisions."

The Bank is publicly acknowledging it's working without a clear roadmap. That should inform how financial markets and households read every forward guidance statement and vote count the Bank releases.

The Supply Shock Problem

Supply shocks — energy price spikes driven by war, shipping disruptions, infrastructure damage — are the worst-case scenario for central banks. They push inflation UP and growth DOWN simultaneously. That's stagflation territory. And there's no clean rate decision that fixes both problems at once.

Cut rates to protect growth and you risk letting inflation re-accelerate. Hold or hike to fight inflation and you hammer an economy already getting crushed by energy costs.

Megan Greene, according to Bloomberg's reporting on her public statements, has been one of the more hawkish external members on exactly this point — arguing that supply shock inflation can be persistent and that central banks have consistently underestimated that persistence in recent years. The Bank of England, the Federal Reserve, and the European Central Bank all famously called post-COVID inflation "transitory" in 2021. It wasn't.

The financial press has not seriously examined whether the MPC is making the same mistake again — just in the opposite direction, assuming this energy shock will fade cleanly.

What This Means for Regular People

Bank Rate at 3.75% is still historically elevated. British mortgage holders on variable rates or facing fixed-rate renewals are paying significantly more than they were three years ago.

Every month the MPC holds rather than cuts is another month of that pressure.

If the Breeden-Ramsden-Taylor camp is right — that disinflation was nearly done before the war shock — then rates could start coming down by summer 2026, assuming the energy disruption doesn't compound further.

If the Lombardelli-Greene-Mann camp is right — that second-round inflation effects are building — then cuts get pushed back, and British households keep getting squeezed.

The Bank itself, per its October 2025 research paper, is updating its communications to better reflect that it's weighing multiple scenarios, not running a single forecast.

That's intellectually honest. It's also not reassuring when you're trying to decide whether to fix your mortgage for two years or five.

The Split Decision

The headline was "unanimous hold." The real story is a committee split between members who think the war shock is a temporary interruption to a finished job, and members who think it could reignite persistent inflation in an already fragile economy.

One of those camps is going to be right. British households will feel the difference either way.