The Bank of England decided to keep Bank Rate at 3.75% because the Monetary Policy Committee (MPC) judged that cutting rates too soon could allow inflation to become persistent, while raising rates could unnecessarily weaken an already fragile economy. In other words, they chose to wait for more evidence.

The main reasons were:
Inflation is still above target. UK CPI inflation has fallen to around 2.6%, which is a big improvement from previous years, but it remains above the Bank’s 2% target. The MPC expects inflation to rise again later this year before easing back.
Middle East tensions have created uncertainty. Although energy prices have retreated from their peak, the conflict around the Strait of Hormuz and the wider Middle East has kept oil and gas markets volatile. The Bank is concerned that another spike in energy prices could quickly feed into household bills and business costs.
The labour market is cooling. Wage growth and employment are showing signs of slowing, which should reduce domestic inflationary pressure over time. This argues against raising rates further.
Economic growth remains weak. The UK economy has been growing only modestly. Cutting rates would support growth, but the MPC believes doing so before inflation risks have clearly diminished could be counterproductive.

The Bank’s thinking can be summarized as follows:

Policy rate
→
Loan cost
→
Saving return
→
Credit · assets · expectations · FX
Consumption
→
Investment
→
Aggregate demand
→
Outside shocks ↙
Inflation pressure
→
Inflation · after a lag
Inflation pressure stays at the policy reference; outside shocks can still move prices.
Policy
Tighten Hold, Ease
Tighten Hold, Ease

Why was the vote divided?

The decision was not unanimous.
Six members, including Governor Andrew Bailey, voted to keep rates at 3.75%.
Three members wanted to raise rates to 4.0%, arguing that inflation risks from energy prices and geopolitics warranted a stronger signal that the Bank remains committed to returning inflation to 2%.

What does this mean for mortgages and savers?
Mortgage holders are unlikely to see significant changes in borrowing costs immediately.
Savers should continue to benefit from relatively attractive savings rates.
Businesses still face borrowing costs that are higher than before 2022, which may restrain investment.
What happens next?

The next move depends largely on three factors:

Whether inflation continues moving back towards 2%.
Whether wage growth continues to moderate.
Whether global energy prices remain stable or rise again because of geopolitical events.

Given current data, markets increasingly expect the Bank to remain cautious, with any future move depending on how those inflation risks evolve rather than following a preset path.