Bank of England Interest Rate Decision (September 2026)

What it means

The Bank of England's Monetary Policy Committee chose to leave its benchmark interest rate unchanged at 3.75%. The vote was far from unanimous: six members backed holding, while three (Megan Greene, Catherine Mann and Huw Pill) pushed for an immediate rise to 4%. The decision comes as UK CPI inflation jumped to 3.1% in August (from 2.9% in July), a five-month high, driven largely by higher energy costs linked to the conflict in the Middle East.

What it moves

The hold comes just one day after the US Federal Reserve raised its rate 25 basis points to a 3.75%-4% range — its first hike in three years. This divergence between a more hawkish Fed and a cautious BoE tends to weaken the British pound against the dollar, pushes UK gilt yields higher, and adds volatility to currency and bond markets globally.

Affected markets

• GBP/USD ↓ — Fed hiking while BoE holds widens the policy-rate gap, favoring the dollar over the pound
• UK Gilts ↑ — Rising inflation (3.1%) plus a divided 6-3 vote keeps yields elevated on expectations of a future hike
• US Dollar Index (DXY) ↑ — Diverging central bank paths (hawkish Fed vs. cautious BoE) support broad dollar strength
• Global equities → — Mixed signal: a hold avoids an immediate growth shock, but rising energy-driven inflation and a split vote add policy uncertainty