Mortgages, bills and jobs: Five takeaways from the Bank of England meeting

Despite a surprise drop in the most recent jobless rate, unemployment could rise as households save more and spend less; higher inflation could affect 2027 wage negotiations, while 2026 pay settlements are largely complete.

In every scenario, the Bank expects the inflation rate to rise this year as energy prices push up food costs, with food price inflation potentially reaching 4.6% by September 2026.

Those on prepayment meters can use less energy during the warmer summer months, but may face larger increases if prices remain high in winter.

Nearly 40% of households are on fixed tariffs for electricity and gas, higher than the roughly 25% at the time of energy-price spikes in 2022; these households will be protected until their contracts end.

The energy regulator Ofgem's price cap will push typical annual energy bills higher, with the Bank projecting a rise to close to £1,900 in July 2026 and staying near that level for the rest of the year.

The Bank estimates that about 53% of UK mortgage holders will see their payments rise, while roughly 25% of those who fixed at higher rates should see payments fall.

The Bank's rate-setting committee says that, over the next three years, average monthly payments for borrowers moving to a new fixed-rate deal are expected to rise by roughly £80, though there will be variation depending on energy prices.

The Bank notes that more than seven million homeowners have fixed-rate mortgages – about 87% of all mortgages.

In its most adverse scenario, which would see oil above $120 a barrel for the rest of the year and inflation topping 6% early next year, as many as six rate rises could be on the way, which could take the Bank's base rate to 5.5%.

In the scenario the Bank governor put most weight on, with energy prices slowly falling, the rate-setting committee's deliberations suggest a rise or two could be on the cards this year.

The Bank considered a range of scenarios to guide its actions in the coming months, given the uncertain severity and duration of the conflict in the Middle East.

The Bank of England kept the base rate unchanged in the latest decision reported on April 30, 2026, but signalled that rises could come later this year as the impact of the Middle East conflict on the economy remains uncertain.