The MPC voted to keep Bank Rate at 3.75% despite growing inflation pressure and a widening split within the committee
The Bank of England has kept its base rate unchanged at 3.75% for a sixth consecutive meeting, resisting calls for an immediate rise despite inflation climbing to 3.1% in August.
The Monetary Policy Committee (MPC) voted to hold borrowing costs in place at its 17 September meeting. The decision follows five rounds of inaction since the Bank completed its easing cycle in late 2025, and comes against a backdrop of rising energy costs and renewed geopolitical uncertainty that has driven swap rates sharply higher in recent weeks.
A Mortgage Introducer poll ahead of the decision found that mortgage professionals were far from certain about the MPC’s intentions. Of 133 respondents, 57% backed a hold, but 35% predicted a rise, a dramatic shift from July, when just 11% of those surveyed called a hike. Two per cent expected a cut, while 7% said the outcome was too close to call.
Duncan Kreeger, chief executive of commercial mortgage and bridging specialist TAB, welcomed the outcome.
"The Bank of England was right to keep interest rates unchanged for the sixth month in a row – despite growing fears of an inflationary upsurge as oil prices climb," he said. "Leaving borrowing costs at 3.75% was the sensible option. Yes, higher energy prices could push inflation towards 4% this winter but we can't ignore the state of the labour market – the number of people in payrolled employment fell by 26,000 in August – the Bank shouldn't be hiking rates just because of higher oil prices."
Kreeger also pointed to the effect of rising government bond yields as a natural brake on the economy. "The MPC doesn't need to raise the base rate," he said. "The increase in government bond yields, which move inversely to prices, will naturally cool the UK economy and put downward pressure on inflation. This was the right decision."
What does a hold mean for mortgage borrowers?
Despite the MPC holding firm, Nicholas Mendes, mortgage technical manager and head of marketing at John Charcol, cautioned that the decision offered little immediate relief for those with fixed-rate deals coming to an end.
"Holding did not mean the inflation risk had disappeared, nor was it a signal that lower mortgage rates were around the corner," he said. "The MPC chose to give itself more time to see whether higher energy costs remained a headline inflation issue or started feeding more broadly into wages and domestic prices."
Mendes noted that lenders had already been moving before the MPC made its call. "Financial markets had already tightened considerably before today's decision," he said. "Mortgage lenders had already been responding to higher wholesale funding costs before the decision, with several lenders increasing rates across their ranges. A hold therefore does little on its own to reverse the pressure on fixed mortgage pricing."
Is a rate rise still on the table?
Even with today's hold confirmed, brokers with clients approaching the end of their fixed deals should not assume that rates will soften in the near term.
Looking ahead, Mendes warned that the next data releases would be pivotal. "The next question is whether inflation starts to broaden out," he said. "If it does, the case for a later increase will strengthen quickly. If underlying inflation remains contained, markets may eventually conclude that some of the rate rises they had been pricing were too aggressive."
Those monitoring the latest mortgage rate movements will be aware that several lenders have already repriced twice this month in anticipation of a possible hike. The broader picture for buy-to-let and the rental market remains fragile, with landlords facing a combination of persistent borrowing costs and ongoing regulatory change.
"If underlying inflation remains contained, markets may eventually conclude that some of the rate rises they had been pricing were too aggressive."
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