LONDON / RankWire.AI / – The Bank of England is set to hold its September policy session with the Bank Rate at 3.75%, while inflation remains above the 2% target. The Monetary Policy Committee (MPC) will announce its upcoming interest rate decision on September 17. The meeting will also feature the Bank’s yearly assessment of its quantitative tightening efforts, which aim to shrink its holdings of government bonds. This current £70 billion bond-reduction plan is scheduled to run through September, but no new annual target has been revealed yet.
During the July gathering, the nine-member MPC voted 6-3 to keep the Bank Rate at 3.75%. The three dissenting members favored a 25-basis-point hike to 4%. This vote maintained the status quo after previous rate cuts from the 5.25% peak recorded in 2023. The Bank of England emphasized that its monetary policy remains focused on restoring consumer price inflation sustainably to the government’s 2% objective.
UK consumer price inflation increased to 2.9% in July from 2.6% in June, as per the Office for National Statistics. CPIH inflation, which also includes owner-occupier housing costs, rose to 3.1% from 2.8%. Core CPI held steady at 2.6%, while inflation in services slowed to 3.4% from 3.6%. The ONS will publish the consumer price data for August on September 16, just one day prior to the MPC’s decision.
Inflation figures and economic growth influence policy deliberations
Recent economic indicators point to ongoing growth in the UK. The gross domestic product increased by 0.4% in July, following a 0.3% rise in June, with no growth recorded in May. Over the three months leading up to July, real GDP also expanded by 0.4% compared to the previous quarter. Service sector output grew 0.6% during that period, while both production and construction declined by 0.5%. Services constitute the largest segment of the UK economy.
The Bank initiated quantitative tightening in 2022, ceasing reinvestment of maturing securities and later beginning active gilt sales. As part of the current cycle, the MPC has directed a reduction of £70 billion in gilt holdings between October 2025 and September 2026. Official figures indicate the stock stood at £489.026 billion as of September 9, close to the £488 billion goal. For the July-to-September period, the Bank scheduled five auctions involving short and medium maturity gilts.
Annual review of quantitative tightening approaches
Last year’s review of the program already resulted in a slower pace of quantitative tightening. In September 2025, the MPC lowered the annual gilt-reduction target from £100 billion to £70 billion. The composition of active gilt sales was also adjusted, with approximately 40% allocated to short-maturity gilts, another 40% to medium maturities, and 20% to long-term gilts. The latest quarterly schedule did not include any long-maturity gilt auctions, though short and medium-term gilts remained part of the plan.
This September meeting coincides with the review of interest rate settings and balance-sheet policies, aligning both with the same schedule. Until the decision is announced, the Bank Rate remains at 3.75%, and the £70 billion quantitative tightening cycle continues as the official plan. The Bank Rate impacts borrowing and savings costs across the UK financial landscape, although other factors also influence commercial rates. The upcoming announcement follows data from July showing increased consumer inflation, ongoing economic growth, and an Asset Purchase Facility nearing its existing gilt-reduction target.