Bank rate maintained at 3.75% - September 2026 Monetary Policy Summary and Minutes

The MPC held Bank Rate at 3.75% by a 6-3 majority, with Greene, Mann and Pill dissenting for an immediate hike to 4%. That is the salient fact: a three-way tightening dissent plus explicit hike guidance from sitting hold members. Risks to inflation are judged tilted further to the upside than in July, and CPI is now projected slightly above 4% in 2027 Q1. The Committee separately voted unanimously to unwind QT to zero under a new multi-year plan at a £46bn average annual pace.

What’s new: The hold itself was fully priced: nearly all MaPS respondents expected no change and median expectations implied a prolonged hold. The genuinely new content is the composition and tone of the vote. Three members dissented for a hike, and Bailey, Lombardelli and Ramsden each put tightening on the table while voting to hold. The market had already begun pricing higher near-term rates after the mid-September escalation, so part of the hawkish tilt is confirmation rather than surprise. The multi-year QT plan, the £20bn annual sales pace and the proposed sales-to-Government model are new policy commitments.

KEY FINDINGS

• Bank Rate held 6-3, with Megan Greene, Catherine L Mann and Huw Pill voting for a 0.25 percentage point increase to 4%. A three-way tightening dissent hardens the hawkish bias and keeps front-end hike risk live.
• Three hold voters signal hikes ahead: Bailey says it is likely that policy may have to tighten, Lombardelli says the case for raising Bank Rate is building, and Ramsden says there could be a case for increasing Bank Rate. The guidance turns a hold into a hawkish hold and anchors the front end higher.
• CPI is now projected around 3 and three quarters percent in 2026 Q4, versus 3.2% in July, and slightly above 4% in 2027 Q1. A higher near-term inflation path supports the hawkish bias and the dissenters' case for pre-emptive tightening.
• Most members see signs of stabilisation in the margin of slack, with Q3 GDP now tracking 0.4% versus the 0.1% projected in July. This removes a core dovish argument and shifts the balance of views toward the hawks.
• The Committee voted unanimously to unwind the APF to zero via a multi-year plan: £20bn annual sales alongside maturities, a £46bn average annual reduction, complete by September 2034. Slower and more predictable than the prior £70bn year, offering modest long-end support against the hawkish rate signal.

FROM THE DOCUMENT

Three members (Megan Greene, Catherine L Mann and Huw Pill) preferred a 0.25 percentage point increase in Bank Rate at this meeting.

Six members (Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden and Alan Taylor) voted in favour of the first proposition. Three members (Megan Greene, Catherine L Mann and Huw Pill) voted against this proposition, preferring to increase Bank Rate by 0.25 percentage points, to 4%.

But if the conflict in the Middle East persists for an extended period, as appears to be the case, and the risk of second-round effects emerging increases, it is likely that policy may have to tighten.

The outlook for energy prices is uncertain and could change in the coming weeks, but the case for raising Bank Rate is building the longer the conflict continues without lasting resolution.