The Bank of England maintained interest rates at 3.75%, despite a split vote among its monetary policy committee, with six members favoring stability and three advocating for a hike to 4%. The decision comes amid warnings that ongoing conflicts in Iran could lead to future rate increases due to rising inflation pressures from volatile energy prices. Economists predict a significant chance of an interest rate hike by November as CPI inflation is expected to peak at about 4% by early 2027, driven partly by higher gas and electricity bills.
Written locally by qwen2.5:14b 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 decided to keep interest rates at 3.75%, marking the sixth consecutive meeting where they have held steady despite rising inflation concerns. The Monetary Policy Committee (MPC) voted 6-3 to maintain current rates, with three members advocating for a hike to 4%. Inflation rose to 3.1% in August, up from 2.9% the previous month, surpassing the Bank's target of 2%. Economists predict further rate increases if global energy prices remain volatile due to the ongoing conflict in Iran. Meanwhile, mortgage rates have already climbed beyond the base rate as lenders anticipate future hikes by the central bank.
Written for “Interest Rates Decision UK BoE” on 2026-09-17,
grounded in this article and the 6 other(s) covering the same event.
Why this leaning score
This article does not take a side on a contested political
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or critically written without being left or right, and scoring it
anyway is how approval of a subject gets recorded as a political
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No political leaning scored for article 16030 · logged 2026-09-17
Interest rates held at 3.75% but Bank warns Iran war could mean future hike
uncertain
war → hold → hike
The Bank of England has held interest rates at 3.75%, but policymakers warned that pressure to raise rates is building as the Iran war goes on.
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war → hold → rates
The Bank’s monetary policy committee (MPC) said global energy prices were volatile and likely to push inflation higher by the end of the year than it was previously expecting.
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it → say → year
But it follows a split vote among the nine-person committee, with six members voting to hold them steady and three calling to raise rates to 4%.
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three → follow → %
This refers to so-called second-round effects, meaning things such as higher wage demands among the UK workforce and prices that are charged in shops.
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that → refer → shops
He went on: “But 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.”
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inflation → go → target
Economists have been warning that borrowing costs may have to be hiked in the months ahead to tackle rising inflation in the UK.
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costs → warn → UK
The rate of Consumer Prices Index (CPI) inflation rose to 3.1% last month, up from 2.9% in July and reaching a five-month high, the latest official figures showed.
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figures → rise → high
This was driven largely by petrol and diesel prices, which have risen to multi-year highs.
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which → drive → highs
Households are also facing another rise in their gas and electricity bills from next month when Ofgem’s new price cap comes into effect.
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cap → face → effect
The Government already announced that it is scrapping VAT from energy bills between October and March to help provide “breathing space” for households.
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it → announce → households
Based on recent wholesale energy prices, the MPC said it was now expecting CPI inflation to rise to about 3.75% by the end of 2026 and peak at about 4% by the start of 2027.
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inflation → base → 2027
This compares to its previous forecast of CPI at about 3.2% by the end of the year.
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This → compare → year
The committee said the conflict in the Middle East and the impact on energy prices at the UK economy “remained the dominant source of uncertainty for the inflation outlook”.
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conflict → say → outlook
Other policymakers on the MPC said the case for raising interest rates was building the longer the war goes on.
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war → say → rates
Economist Suren Thiru, of the Institute of Chartered Accountants in England and Wales, said the Bank has left the “door wide open” to a November rate hike.
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Bank → say → hike
“Interest rates are at a critical cliff-edge moment,” he said.
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he → say → moment
“While policy could still remain on hold this year, persistent US-Iran hostilities mean the risk of a rate hike has shifted from a possibility to a probability.”
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risk → remain → probability
Meanwhile, the Bank of England announced a shake-up of its government bond selling programme, known as quantitative tightening (QT).
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Bank → announce → tightening
It is asking Mr Healey to approve a new method of effectively selling a stock of government bonds, known as gilts, back to the Government rather than to the financial markets.
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It → ask → markets
This means pausing its current gilt auctions until the decision is finalised.
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decision → mean → auctions
The next stage of the QT programme will see the overall stock of gilts reduced at an average pace of £46 billion a year over the next eight years, both as they mature and through average annual sales of £20 billion.
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they → see → billion
A substantial portion of the gilts will not be sold and will be set aside to back the issuance of bank notes.
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portion → sell → notes
Mr Bailey said the Bank had “provided clarity over the future” of its QT programme.
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Bank → say → programme
The announcement triggered a drop in government borrowing costs on Thursday, known as gilt yields, which have soared to fresh highs in recent weeks.
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which → trigger → weeks
The yield on 30-year gilts fell to about 5.72%, the lowest level in more than a month.
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yield → fall → month
The Aporia
