Bank of England Holds at 3.75% as Bailey Condemns Mandelson-Epstein Ethics Violations

The Bank of England has maintained interest rates at 3.75%, with Governor Andrew Bailey using the post-decision press conference to strongly condemn the ethics violations revealed in Peter Mandelson’s relationship with Jeffrey Epstein. Bailey described himself as “shocked” by the revelations.
The monetary policy committee’s 5-4 vote to hold rates came alongside projections of falling inflation and weaker growth. On policy matters, Bailey stated that inflation should return to around 2% by spring and suggested further rate cuts should be possible later in the year. However, it was his comments on ethics that drew particular attention.
Asked about the Mandelson case, Bailey said, “We do learn from that that there are times when lobbying happens which has ethics attached to it which I do find shocking, frankly.” His strong language reflected deep concern about the breach of trust involved in leaking sensitive government policy information to a convicted child sexual abuse offender.
Bailey appeared to become emotional when discussing the late chancellor Alistair Darling, with whom he worked closely during the financial crisis. He referenced seeing pictures of Mandelson with Darling and emphasized that Darling “was doing all the right things” with “a thorough sense of honesty and decency.” Bailey noted poignantly that Darling “can’t speak for himself today, sadly.”
On economic matters, the Bank projects GDP growth of 0.9% this year, down from 1.2% previously, with unemployment expected to reach 5.3%. Chancellor Rachel Reeves’s budget measures, including utility bill cuts and rail fare freezes from April, are forecast to drive inflation down to 2.1% by mid-2026, compared to 3.4% in December. Financial markets assign a 50% probability to a rate cut in March.