BoE Holds Rates at 3.75%: Stability Amid Sticky Inflation Signals Caution for Indian Exporters

Market snapshot: The Bank of England (BoE) maintained the Bank Rate at 3.75% during its February 2026 meeting, aligning perfectly with market consensus. This neutral stance follows a period of disinflationary progress that saw the rate cut from 4% in December 2025. While the 'hold' was widely expected, the accompanying commentary highlights a divided Monetary Policy Committee (MPC) balancing a sluggish GDP growth forecast of 0.9% against a persistent inflation print of 3.4%, which remains significantly above the 2% target.

Summary: The Bank of England pauses rate cuts at 3.75%, opting for stability as UK inflation and wage growth remain elevated, providing a predictable but restrictive environment for India's IT and Auto sectors.

Key Takeaways

• Monetary policy remains in a 'wait-and-watch' mode with no change to the 3.75% base rate.
• UK inflation at 3.4% and wage growth projections of 3.5% for 2026 are preventing immediate further easing.
• Markets now look toward April 2026 for the next potential 25bps cut, contingent on services inflation easing.

SAHI Perspective

For Indian markets, the BoE's decision to hold provides much-needed currency stability for the GBP/INR pair, which is crucial for IT majors like TCS and Infosys. However, the plateauing of rates suggests that the recovery in UK discretionary tech spending may be delayed until the second half of 2026. SAHI views this as a 'tactical neutral' for the Nifty IT index, as interest-sensitive UK clients will likely maintain strict budget controls under the 3.75% cost-of-capital regime.

Closing Insight

While the BoE hold offers predictability, the high terminal rate environment ensures that capital-intensive projects in the UK-India corridor will remain under scrutiny. Investors should focus on companies with high local-currency contract visibility and strong AI-led transformation pipelines.

High Performance Trading with SAHI.