# Bank of England holds interest rates at 3.75% but says inflation still to rise

By Katie Horne — 2026-06-18

Katie Horne, banks relationship manager at Flagstone, said: “April’s surprise inflation dip is widely expected to have been a fleeting reprieve.

“This month the rate has steadied, but we’re yet to hear the firing gun on a longer-term downward inflationary trend.

“Despite higher-than-desired inflation on both sides of the Atlantic, expectations of a UK base rate change in June have been limited.

“However, the chances of a base rate hike in the second half of this year are starting to look increasingly likely, particularly after the ECB hiked its rate on June 11 in response to the energy price shock overspilling into the wider economy.

“A base rate hold over the early summer would help sustain a competitive and compelling savings rates market, but it could take further steam out of an already fairly stagnant housing market.

“House price growth slowed to 1.7 per cent in May from 3 per cent in April and average house prices slid by 0.6 per cent in May.

“Hopeful homebuyers with ready-to-go deposits would be wise to ensure their funds are working hard for them while they wait out the effects of the conflict in the Middle East.

“Leaving deposit funds in a current account or savings account that offers a lower rate of return than the current of rate of inflation is effectively signing your money up to completely avoidable value erosion.

“Higher interest savings accounts are a great way to make sure your deposit funds maintain their value while inflation remains high and you’re waiting to buy.

“And it’s not hard to find inflation-beating savings rates.

“More than 90 per cent of the 262 rates available to personal savers on Flagstone currently beat inflation.

“In April, £12 billion was deposited into ISAs, pointing to above-average demand for tax-free savings so early in the new tax year.

“Cash ISA rates still remain competitive with many providers offering rates in excess of four per cent.”

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