BoE Holds Rates Steady Amid Rising Inflation Concerns

The Bank of England's Monetary Policy Committee (MPC) held its base rate at 3.75% on September 17, 2026, as widely expected. In a split vote, six members favored holding the rate steady, while three, Megan Greene, Catherine Mann, and Huw Pill, pushed for an immediate rise to 4%. According to Governor Andrew Bailey, holding rates was appropriate at this meeting, but if the Middle East conflict persists, policy may have to tighten.

Bailey acknowledged that energy price risks remain firmly to the upside, with Brent crude reaching $106 per barrel and UK wholesale gas prices up 36% and 78% respectively since July. The committee now expects inflation to reach around 3.75% in Q4 2026 and slightly above 4% in early 2027.

Megan Greene, Catherine Mann, and Huw Pill argued that waiting for definitive evidence of second-round effects would leave policy behind the curve. They pointed out that with CPI projected to exceed 4% in early 2027, just as wage negotiations get underway, acting too slowly risks allowing inflation to become entrenched.