The Bank of England published a decision on 17 September to hold Bank Rate at 3.75% after a 6–3 vote by its Monetary Policy Committee. The meeting ended on 16 September. Three members preferred an immediate 25-basis-point increase to 4%. The majority judged that it was not yet necessary to tighten policy despite higher energy costs and renewed inflation pressure.
The Bank said twelve-month consumer price inflation was 3.1% in August and could rise to slightly above 4% early in 2027. It linked the near-term increase chiefly to the energy-price shock associated with the Middle East conflict. The committee said underlying domestic price and wage pressures had continued to ease. It also noted that the labour market had weakened further.
A DIVIDED POLICY COMMITTEE
Governor Andrew Bailey and five other members voted to leave Bank Rate unchanged. Megan Greene, Catherine L Mann and Huw Pill favoured a quarter-point increase. The minority placed more weight on the risk that the energy shock could become embedded in wages and prices.
The majority said monetary policy needed to balance the risk of persistent inflation against the risk of an excessive decline in activity. It also said there was limited evidence so far of second-round effects from the energy shock. The committee did not provide a preset path for future rates and said decisions would depend on the evolution of the outlook.
GILT UNWIND SET THROUGH 2034
The Asset Purchase Facility held £488 billion of gilts on 16 September after declining from a £895 billion peak in February 2022. The Bank plans to set aside £120 billion of the longest-dated bonds to back banknote issuance, leaving £368 billion to unwind for monetary-policy purposes. Of that balance, £222 billion is expected to mature by completion and £146 billion is to be sold.
The plan implies average annual reductions of £46 billion through September 2034, including annual sales of £20 billion alongside maturities. Reuters reported that active auctions are paused while the Bank and Treasury complete operational arrangements, with details expected by April 2027. The next rate decision will depend on evidence about inflation persistence, wages, activity and the transmission of the energy shock.