Bank of England holds rates at 3.75% as three policymakers vote for a rise
A 6-3 split on the Monetary Policy Committee kept Bank Rate on hold, with the minority favouring an increase to 4 per cent against inflation running at 3.1 per cent.
The Bank of England’s Monetary Policy Committee voted by a majority of 6-3 to hold Bank Rate at 3.75 per cent at its meeting ending on 16 September, with three members preferring an increase to 4 per cent.
The decision leaves borrowing costs unchanged as the Bank weighs inflation, which the ONS measured at 3.1 per cent in August, against a labour market that has been softening for months.
The split is the story. A 6-3 vote with the minority favouring a rise suggests the committee’s hawks are increasingly uneasy about price pressures, even as the majority judges that holding is the right call for now. The Bank’s staff now expect CPI inflation to reach slightly over 4 per cent in early 2027, up from 3.2 per cent in the July forecast.
The split vote shows how finely balanced the judgment has become: inflation above target, but an economy that is barely growing.British Journal analysis
Governor Andrew Bailey warned that the longer the conflict in the Middle East persists, the more likely the Bank would need to raise rates: “The longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our 2% target.”
For households, the hold means no immediate change to the cost of variable-rate mortgages or to the savings rates banks choose to offer. For the Government, it means the Chancellor’s first Budget, due on 28 October, will be framed by borrowing costs that markets still expect to fall only slowly.
The Bank publishes its full reasoning in the minutes of the September meeting. Its next scheduled decision on Bank Rate is due in November.
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