Bank of England holds rates at 3.75% as three policymakers call for a rise
The Bank of England voted 6–3 to keep Bank Rate at 3.75%, its sixth consecutive hold, while Megan Greene, Catherine Mann and Huw Pill backed a 0.25-point increase. Chatham Financial reports that Governor Andrew Bailey warned rates may need to rise if energy-driven inflation persists; the Bank’s models suggest inflation could exceed 4% in early 2027 under that scenario.
Bottom line — The MPC’s November meeting will test whether energy costs are spreading into UK wages and prices.
Go deeper 7
-
Chatham Financial says core inflation was 2.6% and labour-market conditions were loosening, helping support the majority’s decision to wait.
-
The Bank said tighter financial conditions since the Middle East conflict began should help curb inflationary pressures, according to Chatham Financial.
-
LiveSquawk reported August CPI inflation rose to 3.1% from 2.9%, while core inflation held at 2.6%.
-
LiveSquawk said petrol prices rose by 9.1 pence per litre in August to 161.3 pence; diesel rose by 14.2 pence to 181.8 pence.
-
Chatham Financial reported that markets read the decision as less hawkish than expected: sterling weakened and GBP swap rates fell by about 0.08 percentage points.
-
The European Commission says markets had priced only 0.50–0.75 percentage points of ECB tightening over its forecast horizon; the ECB later raised its deposit rate to 2.50%, according to Chatham Financial.
-
A Bank of England speech by Megan Greene argued that the UK is at greater risk of second-round inflation through firms’ pricing than through wage-setting.