Full Breakdown
Bank of England Holds Rate at 3.75% as War-Driven Energy Prices Keep Inflation in Check
9/9/2026, 10:48:51 AM
Rate Decision and Immediate Outlook
On September 8 the Bank of England announced it will keep the Bank Rate at 3.75% for the remainder of the year and at least through mid-2027. The decision follows a Reuters poll of 65 economists conducted September 4 – 8, in which every respondent expected the Monetary Policy Committee (MPC) to leave rates unchanged at its meeting on September 17. Eight economists forecast a possible rise to 4.00% by year-end, but the overwhelming consensus is for a hold.
Economic Context and War Influence
Higher global energy prices have been linked to the ongoing U.S.–Israeli conflict with Iran. Brent crude futures have hovered near $100 a barrel, yet economists say there is still no clear evidence that these costs have filtered into UK consumer-price inflation. The Bank therefore sees “no flashing warning signs” for immediate policy tightening. A recent rise in global bond yields has tightened financial conditions, raising mortgage-rate pressures but also giving policymakers room to observe economic performance.
Data and Forecasts
- Current headline inflation: 2.9% (above the BoE’s 2% target).
- Median forecast: inflation to average 3.1% in 2026, falling to 2.5% in 2027 and 1.9% in 2028.
- Economic growth projected at 1.1% in 2026 and 1.2% in 2027, accelerating to 1.5% in 2028.
- James Moberly, senior UK economist at Goldman Sachs, expects inflation to peak at 3.3% in November before declining faster than the BoE’s own projection.
Official Statements & Responses
What’s Next
The median view of the poll points to a quarter-point rate cut in the third quarter of 2027, later than the August forecast. Economists note that another inflation and labour-market data release is due before the September decision, but they do not expect it to alter the MPC’s voting stance at this meeting.
