Bank of England Holds Bank Rate at 3.75% as Middle East Energy Shock Drives Inflation to 3.1%
On September 16, 2026, the Monetary Policy Committee of the Bank of England decided by a vote of 6–3 to keep the Bank Rate steady at 3.75%. The majority comprised Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden, and Alan Taylor, while dissenting members Megan Greene, Catherine L Mann, and Huw Pill advocated for an increase to 4%. Additionally, the MPC reached a consensus to cease UK government bond purchases, aiming to unwind £368 billion by 2034. In August, UK CPI inflation hit 3.1%, Brent crude prices surged 36% to $106 per barrel, and the Ofgem energy price cap will rise to £1,723. GDP grew by 0.4% in Q2 2026 and July, with unemployment at 4.9%. The Bank plans to allocate £120 billion of gilts for banknote issuance.
Key facts
- The MPC voted 6–3 to maintain Bank Rate at 3.75% at its meeting ending 16 September 2026.
- Megan Greene, Catherine L Mann and Huw Pill voted to increase Bank Rate by 0.25 percentage points to 4%.
- The MPC unanimously voted to reduce the stock of UK government bond purchases held for monetary policy purposes to zero.
- The remaining £368 billion of gilts will be unwound at an average annual pace of £46 billion by the end of 2034, through £20 billion in annual sales alongside maturing gilts.
- UK CPI inflation was 3.1% in August 2026, with 0.7 percentage points of the 1.1-point overshoot above the 2% target driven by energy prices, mostly motor fuels.
- Brent crude spot prices rose 36% to $106 per barrel and UK wholesale gas rose 78% to 207 pence per therm since the period before the July Report.
- CPI inflation is projected to reach around 3¾% in 2026 Q4 and slightly above 4% in 2027 Q1.
- The Ofgem energy price cap for October to December will increase to £1,723.
- The Bank will set aside £120 billion of longest-dated gilts to back current and future banknote issuance.
- The Bank engaged with HM Treasury and the Debt Management Office on a model for APF sales to Government, with progress reviewed before April 2027.
Entities
Artists
- Andrew Bailey
- Sarah Breeden
- Swati Dhingra
- Clare Lombardelli
- Dave Ramsden
- Alan Taylor
- Megan Greene
- Catherine L Mann
- Huw Pill
- Daniel Gallagher
Institutions
- Bank of England
- Monetary Policy Committee
- Financial Policy Committee
- Asset Purchase Facility
- HM Treasury
- Debt Management Office
- Ofgem
- Citi
- YouGov
- Bank/Savanta
- S&P Global
- KPMG
- REC
- HMRC
- International Energy Agency
- Ipsos
- NHS
- US Supreme Court
- Bank of England's Court of Directors
- DMP Survey
Locations
- United Kingdom
- Middle East
- Ukraine
- Russia
- Iran
- United States
- euro area
- Europe
- Euro area
- Asia
- Gulf
- Strait of Hormuz
- Israel
- Red Sea