The Bank of England left its Bank Rate unchanged at 3.75% on Thursday, following a 6-3 vote by the Monetary Policy Committee. Governor Andrew Bailey said higher global energy costs have so far had a limited impact on UK prices, but warned that prolonged volatility could force a rate increase.
August inflation rose to a five‑month high of 3.1%, while core inflation held at 2.6% for a fourth consecutive month. Analysts expect consumer‑price inflation to stay above the 2% target into early next year, with some forecasts seeing it exceed 4% before a gradual decline.
Capital Economics' Paul Dales noted that the BoE appears close to the point where it can no longer absorb rising energy prices, suggesting a hike to 4.00% at the November meeting if energy costs do not fall and geopolitical tensions ease. Webull UK CEO Nick Saunders echoed the view, calling the November move a question of "when, not if."
The decision comes amid a broader global tightening cycle. The U.S. Federal Reserve recently implemented its first rate increase since July 2023, and the European Central Bank raised borrowing costs for a second time this year, warning that inflation could remain well above target for an extended period.
Despite the hold, the BoE retained some policy breathing room, citing stronger‑than‑expected economic growth and a resilient services sector. Market participants will watch upcoming data and the November policy meeting for clues on the next move.
