The Bank of England’s Monetary Policy Committee (MPC) voted 6-3 to hold Bank Rate at 3.75% in September, with the minority preferring a 25-basis-point increase, as the protracted Middle East conflict and higher energy prices tilted inflation risks further to the upside despite little evidence of material second-round wage and price effects. This extended the hold at 3.75% since a December 2025 cut from 4%. The MPC also voted unanimously to reduce its stock of UK government bonds held for monetary policy purposes to zero under a multi-year plan averaging GBP 46 billion of annual unwind through end-2034, including GBP 20 billion in yearly sales alongside maturities. Consumer price index (CPI) inflation rose to 3.1% in August and is expected to reach around 3.75% in 2026 Q4 and slightly above 4% in 2027 Q1, against the 2% target, while gross domestic product grew 0.4% in 2026 Q2 and activity has been slightly stronger than expected, although soft labour market conditions and higher financing costs should restrain inflation over time. Globally, conflicts in the Middle East and in Ukraine and Russia have increased the level and volatility of crude, gas and refined energy prices, while food and artificial intelligence-related supply pressures pose additional upside risks. The MPC stands ready to act as necessary to keep inflation on track to meet the target sustainably in the medium term.
2026-09-17Bank of England
Bank of England Holds Bank Rate at 3.75%
The Bank of England’s Monetary Policy Committee (MPC) voted 6-3 to hold Bank Rate at 3.75% in September 2026, with three members favouring a 25-basis-point increase as higher energy prices increased upside inflation risks. The MPC unanimously agreed to reduce its monetary policy gilt holdings to zero by end-2034 through an average annual unwind of GBP 46 billion, while forecasting consumer price index inflation to rise slightly above 4% in the first quarter of 2027.