LONDON / RankWire.AI / – Ahead of its September policy gathering, Bank of England maintains the Bank Rate at 3.75%, while inflation remains above its 2% goal. The Monetary Policy Committee is set to announce its upcoming interest rate decision on September 17. The meeting will also cover the Bank’s yearly assessment of quantitative tightening, which involves reducing its holdings of government bonds. The current bond-cutting program, valued at £70 billion, is scheduled to continue through September, with no new annual target announced yet.
In its July session, the nine-member Monetary Policy Committee voted 6-3 to keep the Bank Rate at 3.75%. The three dissenters favored a 25-basis-point hike to 4%. This decision kept borrowing costs steady after earlier reductions from the 5.25% peak reached in 2023. The Bank of England reaffirmed that its monetary policy focus remains on bringing consumer price inflation back to the government’s 2% target sustainably.
UK consumer price inflation rose to 2.9% in July from 2.6% in June, based on data from the Office for National Statistics. CPIH inflation, which accounts for owner-occupier housing costs, increased to 3.1% from 2.8%. Meanwhile, core CPI held steady at 2.6%, and services inflation softened to 3.4% from 3.6%. The Office for National Statistics will release consumer price data for August on September 16, just one day before the MPC’s decision.
Inflation trends and economic growth shape the policy discussion
Recent economic figures also reflect ongoing UK growth. GDP expanded by 0.4% in July after a 0.3% rise in June, with no change recorded in May. Over the three months ending in July, real GDP grew by 0.4% compared to the previous three months. Services output increased by 0.6% during that period, whereas production and construction declined by 0.5%. Services comprise the largest sector of the UK economy.
Since 2022, the Bank has been executing quantitative tightening after ending reinvestment of maturing securities and later initiating active gilt sales. Under the current plan, the MPC has directed a reduction of £70 billion in gilt holdings from October 2025 to September 2026. Official figures as of September 9 show the gilt stock at £489.026 billion, close to the £488 billion target. In the July-to-September quarter, the Bank scheduled five sales auctions of short and medium maturity gilts.
Annual review of quantitative tightening approaches
The previous year’s review had already slowed the pace of quantitative tightening. In September 2025, the MPC reduced the annual gilt-reduction goal from £100 billion to £70 billion. It also adjusted the maturity profile of active gilt sales, allocating approximately 40% each to short and medium maturities, with the remaining 20% to long-term gilts. The latest quarterly schedule involved no auctions for long-maturity gilts, while short and medium maturities continued in the program.
The September meeting aligns the current interest rate setting with the annual balance-sheet review, both on the same policy timetable. Until a decision is announced, the Bank Rate remains at 3.75%, and the £70 billion quantitative tightening cycle remains in effect. The Bank Rate influences borrowing and savings costs across the UK financial system, though commercial rates are affected by other factors as well. This announcement follows July data showing elevated consumer inflation, ongoing economic growth, and the Asset Purchase Facility nearing its existing gilt-reduction target.