The Bank of England's Monetary Policy Committee (MPC) is expected to maintain the benchmark interest rate at 3.75% for a sixth consecutive meeting despite rising inflation and global economic pressures. As oil prices remain above $100 per barrel due to continued conflict in the Middle East, economists are uncertain whether the MPC will raise rates before year-end. The Consumer Prices Index (CPI) rose to 3.1% in August, its highest rate since February, driven by increased costs for petrol, diesel, and airfares.
Written by the local model on 2026-09-17,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
The Bank of England is set to keep interest rates unchanged at 3.75% when it meets on Thursday, as most economists predict. This would be the sixth consecutive meeting where the Monetary Policy Committee (MPC) has maintained the current rate despite rising inflation. Consumer Prices Index (CPI) inflation rose to 3.1% in August from 2.9% in July, marking a five-month high and moving further away from the Bank's 2% target. Three MPC members—Huw Pill, Megan Greene, and Catherine Mann—voted for raising rates to 4% at the last meeting, reflecting growing pressure to hike interest rates due to rising prices and energy costs. Economists anticipate another rise in household energy bills next month, potentially prompting a rate increase before year-end. The decision comes as global oil prices surge past $100 a barrel amid tensions in the Middle East, compounding inflationary pressures.
Written for “Interest Rates Decision Britain” on 2026-09-17,
grounded in this article and the 2 other(s) covering the same event.
- Published
Policymakers at the Bank of England are expected to keep interest rates unchanged despite price rises accelerating due to the prolonged conflict in the Middle East.
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rises → publish → East
The nine-member Monetary Policy Committee (MPC) has been meeting amid a backdrop of increasing global energy prices and interest rate rises around the world.
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Committee → meet → world
Economists expect the MPC to hold the benchmark Bank rate at 3.75% for a sixth consecutive meeting but analysts are more divided on whether the rate will need to go up before the end of the year.
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rate → expect → year
The Bank rate is crucial in setting the benchmark for banks and other lenders in setting interest for individuals and businesses borrowing and saving money.
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rate → set → money
The latest interest rate decision will be announced by the Bank at 12:00 BST on Thursday.
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decision → announce → Thursday
Following its previous meeting at the end of July, the MPC indicated it could raise the Bank rate if the Iran war escalated.
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war → follow → rate
Bank of England governor Andrew Bailey told the BBC at the time: "If we get a continuation of this conflict going on and oil prices stay above $100 a barrel... the odds are that interest rates will have to go up higher."
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rates → tell → 100
Oil prices moved above the $100 (£74) level on 9 September, and have remained there since, and there are few signs of a lasting truce in the Iran war.
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prices → move → war
The Bank uses interest rates to control inflation, which charts the rising cost of living.
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which → use → living
It aims to keep inflation at a target rate of 2%.
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It → aim → %
However, official figures released on Wednesday showed the Consumer Prices Index (CPI) measure of inflation had risen to 3.1% in August from 2.9% in July, pushing it to its highest rate in six months.
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measure → release → months
The acceleration was driven by rises in the cost of petrol, diesel and airfares.
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acceleration → drive → petrol
Economists expect that higher global energy costs will feed through to food and fuel prices paid by consumers, meaning the inflation rate is yet to peak.
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rate → expect → consumers
The MPC will be aware that, citing the Middle East conflict and warning inflation was "set to remain well above" its 2% target for some time, the European Central Bank recently raised interest rates to 2.5%.
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Bank → cite → %
In addition, the US Federal Reserve raised its interest rate to 3.5%-3.75% for similar reasons on Wednesday.
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Reserve → raise → Wednesday
However, MPC members will also be keen not to put pressure on employers and further lower the prospects for those seeking a job.
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members → put → job
Households feel the impact of a rising Bank rate through higher borrowing costs, but can benefit from more generous savings rates.
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Households → feel → rates
Given the global picture, and market expectations of a higher Bank rate, a host of major lenders have already increased the cost of new fixed-rate mortgages in recent days.
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host → give → days
Andrew Montlake, chief executive of mortgage broker Coreco, said that the latest data showed that "the inflation dragon has not been fully slain".
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dragon → say → Coreco
"If inflation proves sticky, lenders' funding costs stay under pressure, which makes cheaper mortgages harder to deliver," he said.
"
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he → prove → pressure
We are already seeing lenders reprice upwards, so this will do little to calm things down.
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this → see → things
Borrowers should not panic, but anyone approaching the end of a fixed rate should start looking early, secure an option and keep reviewing it.
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anyone → panic → it
The average two-year fixed residential mortgage rate is at its highest since 11 May, at 5.77%, while the average five-year is at its highest since 8 November 2023, at 5.83%, according to financial information service Moneyfacts.
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year → fix → Moneyfacts
Savers may be offered more generous returns, but the spending power of their savings could be eroded by the rising cost of living.
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power → offer → living
"It's almost impossible to time things just right, so I would urge households to focus on what's best for them now, in the medium term and in the longer term," said Harriet Guevara, chief savings officer at Nottingham Building Society.
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Guevara → time → Society
"For savers, regularly check that your savings are earning a competitive return and that you have the right balance between easy access and money you can afford to put away for longer."
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you → check → access
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