Bank of England to hold rates at 3.75% through 2026, economists say
Nearly 90% of economists polled by Reuters expect the Bank of England to keep its benchmark rate at 3.75% for the rest of 2026, as inflation remains above the 2% target and the Middle East conflict keeps energy prices high. The hold prolongs pressure on mortgage holders and delays relief for borrowers.
Bottom line — The MPC's 6-3 vote in July shows a growing minority pushing for a hike to 4%.
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- All 65 economists surveyed by Reuters between September 4 and 8 expect no change at the MPC's September 17 meeting, according to Cyprus Mail.
- Three of nine MPC members voted for a rate rise at the July meeting, up from two previously, per MoneyWeek.
- Inflation is expected to peak at 3.2% in the final quarter of 2026, the Bank's central projection shows, per MoneyWeek.
- Brent crude is trading around $91 a barrel, roughly 25% above pre-war levels, while the Strait of Hormuz remains closed, reports International Business Times.
- HSBC economist Elizabeth Martins told Reuters that a 'big rebound in energy prices would certainly change things,' but second-round effects have not yet appeared.
- Goldman Sachs' James Moberly expects inflation to peak at 3.3% in November but then fall faster than the BoE projects, per Cyprus Mail.
- Pantheon Macroeconomics analysts told Parliament Politics Magazine that the delayed autumn Budget on November 26 will encourage the MPC to wait before considering another cut.
- HomeOwners Alliance notes that swap rates rose sharply after renewed hostilities in July, pushing fixed mortgage rates higher again.