OECD Gives Bank of England Permission to Hold Rates

The Organisation for Economic Co-operation and Development (OECD) has given the Bank of England permission to maintain its current monetary policy, as inflation in the UK is cooling faster than expected.

In its September 2026 Interim Economic Outlook, the OECD concluded that UK monetary policy is already restrictive enough to bring inflation under control. This means the BoE can hold its Bank Rate at 3.75% without risking a price spiral.

The timing of this decision is notable, as the BoE voted 6-3 on September 17, 2026 to keep rates unchanged at that level, despite acknowledging inflation could breach 4% in early 2027 if energy markets stay volatile.

The OECD projects headline inflation will average 3.1% for the full year of 2026, a downward revision from its earlier estimates of 3.6% to 3.7%. For 2027, the forecast drops further to 2.6%, with room for a rate cut in the third quarter of next year.