Interest Rates Kept Unchanged at Bank of England and European Central Bank
April 30, 2026
both the ECB and Bank of England interest rates were left unchanged as had been expected. The ECB deposit rates has been at 2.0% since a 25-basis point cut last June, while the Bank of England’s last rate change (also of 25 basis points) was done in December to 3.75%. The Bank of England’s decision had just one dissenter, although the preference for a 25-bp reduction came from the bank’s chief economist, Huw Pill. Language in the ECB and BOE statements were similar:
ECB: The war in the Middle East has led to a sharp increase in energy prices, pushing up inflation and weighing on economic sentiment. The implications of the war for medium-term inflation and economic activity will depend on the intensity and duration of the energy price shock and the scale of its indirect and second-round effects. The longer the war continues and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy. The Governing Council will closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. The Governing Council is not pre-committing to a particular rate path.
BOE: The conflict in the Middle East means that prospects for global energy prices are highly uncertain. Monetary policy cannot influence energy prices but will be set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably. The policy stance required to achieve this will depend on the scale and duration of the shock, and how it propagates through the economy. There is a risk of material second-round effects in price and wage-setting, which policy would need to lean against.
Copyright 2026, Larry Greenberg. All rights reserved.
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