Bank of England Holds at 3.75% — Two Hawks Vote to Raise
The MPC voted 7-2 on Thursday to keep Bank Rate at 3.75%. The headline is not the hold — markets expected that — but the dissent. Chief economist Huw Pill and external member Megan Greene voted for a 25 basis point increase to 4%, up from the single hawk at the April meeting. The committee is getting more divided, not less.
The Bank still expects CPI to exceed 3.25% later this year as higher energy costs work through. Governor Bailey stressed the committee is not on a preset path in either direction, but the shift from 8-1 to 7-2 in favour of holding makes a near-term cut less likely, not more. Anyone on a tracker mortgage or variable-rate product should budget on the basis that 3.75% is staying for a while.
Source: Bank of England — Monetary Policy Summary, June 2026 | Related: Compound Interest Calculator
CPI Steady at 2.8% — but Services Inflation Surges to 3.7%
Wednesday's ONS release showed headline CPI unchanged at 2.8% for the 12 months to May, below the 3.0% consensus forecast. That sounds reassuring until you look underneath. Services inflation — the measure the Bank watches most closely for domestic price pressure — jumped from 3.2% to 3.7%, driven by travel and transport costs. Core CPI edged up from 2.5% to 2.6%.
The counterweight was food: year-on-year food price inflation fell to 2.2%, the lowest since December 2024, with meat, dairy and vegetables all cheaper month-on-month. For households, the picture is genuinely split — your weekly shop is easing while your transport, insurance and service bills are climbing. The broader CPIH measure (which adds owner-occupiers' housing costs) held at 3.0%.
Source: ONS — Consumer Price Inflation, UK: May 2026 | Related: Real Cost of Living Tool
HMRC Deploys 350 Fraud Investigators — 30,000 High Street Interventions Planned
The 350 criminal investigators announced at Budget 2025 are now recruited and operational. HMRC will carry out more than 30,000 high street interventions in 2026/27, targeting till fraud, electronic sales suppression tools, money laundering fronts and illicit tobacco and vape sales. The tax minister's accompanying statement — "We are coming for you" — was not subtle.
Unannounced visits have already begun. HMRC raided six London souvenir shops last week alongside Immigration Enforcement and Trading Standards, resulting in three arrests and a £40,000 civil penalty. The focus is on the "controlling minds and enablers" behind front businesses — vape shops, barbers, candy stores and convenience stores used to launder cash or suppress sales records. Legitimate small businesses have nothing to worry about, but the volume of interventions means inspectors will be visible on high streets nationwide.
Source: GOV.UK — Tax Minister to Owners of Dodgy Shops: "We Are Coming for You" | Related: Self-Employed Tax Calculator, VAT Calculator
Key Dates
25 June 2026 (Wednesday) — Summer VAT cut starts. Children's meals and family attraction tickets drop to 5% VAT until 1 September. Businesses must update POS systems before this date.
6 July 2026 — P11D deadline for 2025/26 benefits-in-kind, for employers not using payrolled BIKs.
30 July 2026 (Thursday) — Next Bank of England MPC decision. With two hawks now voting to raise, the July meeting will be closely watched.
31 July 2026 (Friday) — Second payment on account for 2025/26 Self Assessment.