Base Rate Holds at 4.5% — What UK Business Borrowers Need to Know
The Bank of England's Monetary Policy Committee (MPC) voted on 6 February 2026 to hold the base rate at 4.5%, pausing the gradual easing cycle that began in August 2024. For business borrowers on variable-rate facilities, this means another month of stability — but not relief.
What the MPC decided
The MPC voted 7–2 to hold rates at 4.5%, with two members dissenting in favour of a further 25 basis point cut to 4.25%. The decision reflects the Committee's continued concern about services inflation, which remains elevated relative to the 2% target. Headline CPI stood at 2.5% in December 2025 — above target, but falling.
Governor Andrew Bailey noted that while the direction of travel remains downward, the pace will be “gradual and careful.” The MPC is watching closely for any signs that wage growth is re-accelerating, which would complicate further cuts.
For context: the base rate peaked at 5.25% in August 2023, having been held there for 14 months. It has been cut three times since August 2024 — 25 basis points each time — reaching its current level in February 2025 before this extended hold.
What this means if you're on a variable-rate facility
If your business loan, overdraft, or revolving credit facility is priced at a margin over the Bank of England base rate (common wording: “base rate + X%” or “BBR + X%”), today's hold means your repayments stay exactly where they are. No change.
That said, if you secured a variable-rate facility in the 2022–2023 period when rates were being hiked aggressively, you may have seen your repayments increase substantially. The question worth asking now: is your current rate still competitive relative to what new borrowers can access today?
Variable-rate products have benefited from three cuts totalling 75 basis points since August 2024. If your lender has passed these on — not all do promptly — you should already be paying less than you were this time last year.
Is your variable-rate loan now cheaper than alternatives?
Our Overpaying Calculator compares your current rate against typical market benchmarks — in under 30 seconds.
Run the calculationWhat this means if you're looking to refinance a fixed-rate loan
Fixed-rate business loan pricing is influenced by swap rates — financial instruments lenders use to hedge interest rate risk — rather than the base rate directly. Swap rates move in anticipation of future base rate changes, so they already reflect market expectations of where rates are heading.
The February 2026 hold was broadly expected by markets, so swap rates didn't move significantly on the day. If you're shopping for a fixed-rate refinance, the rate environment is broadly unchanged from December 2025.
The more relevant question for fixed-rate refinancing is whether your existing loan has an early repayment charge (ERC). Many commercial loans carry penalties of 1–5% of the outstanding balance for early exit. Use our Exit Penalty Calculator to work out whether the savings from a lower fixed rate would outweigh the exit cost.
What to watch at the next MPC meeting (March 2026)
The next MPC decision is scheduled for 20 March 2026. Markets are currently pricing approximately a 60% probability of a 25 basis point cut at that meeting, which would bring the rate to 4.25%.
Key data to watch between now and then:
- January 2026 CPI data (due mid-February) — any further cooling would strengthen the case for a March cut
- Labour market data — the MPC is particularly focused on private sector wage growth, which remains above 5% annually
- February PMI surveys — a deterioration in services activity could prompt the MPC to move faster
- Any guidance from MPC members in speeches or interviews between now and the meeting
Even if a March cut materialises, the MPC is expected to proceed cautiously — the market consensus is for rates to end 2026 at around 3.75–4.0%, implying two to three further cuts across the year. This is not a rapid easing cycle.
Practical steps for business owners
The hold reinforces a few practical points worth acting on now:
Check your loan agreement for variable rate clauses
Variable-rate loans typically include a clause specifying how quickly rate changes are passed on. Some agreements give the lender up to 30 days to apply changes. If you haven't seen your rate drop since the August 2024 cut, check your documentation — you may be able to query this with your lender.
Consider whether to fix now or wait
With the base rate expected to fall further in 2026, there is an argument for waiting before fixing. However, fixed rates already reflect anticipated cuts — you won't necessarily get a materially better deal by waiting if market expectations are accurate.
Use this stability to review your facility
A hold period is a good time to assess whether your existing facility is still the right product for your business. Have your circumstances changed? Is your credit profile stronger than when you first borrowed? You may now qualify for a significantly better rate.
Quick summary
- Base rate held at 4.5% on 6 February 2026
- MPC voted 7–2; two members wanted a cut to 4.25%
- Variable-rate facilities: no change to repayments today
- Next decision: 20 March 2026 — markets pricing ~60% chance of a cut
- Fixed-rate borrowers: refinancing environment unchanged; check ERCs before acting
LoanLens provides information and commentary, not regulated financial advice. We are not authorised or regulated by the Financial Conduct Authority. This article reflects our analysis of publicly available information and should not be relied upon as the basis for any financial decision. Always seek independent professional advice before making borrowing or refinancing decisions.