LONDON / RankWire.AI / – As it prepares for its September policy session, the Bank of England maintains the Bank Rate at 3.75%, with inflation still exceeding its 2% goal. The Monetary Policy Committee is scheduled to announce its next interest rate decision on September 17. The upcoming meeting will also cover the bank’s yearly assessment of quantitative tightening, which involves shrinking its holdings of government bonds. The current bond-reduction initiative, valued at £70 billion, is set to conclude in September, though the Bank has yet to disclose the next annual goal.
During its July gathering, the nine-member Monetary Policy Committee voted 6-3 in favor of holding the Bank Rate steady at 3.75%. The three dissenting members preferred a 25-basis-point increase to 4%. This vote left borrowing costs unchanged after previous rate cuts from the 5.25% peak in 2023. The Bank of England emphasized that monetary policy continues to aim for a sustainable return of consumer price inflation to the government’s 2% target.
UK consumer price inflation rose to 2.9% in July, up from 2.6% in June, according to the Office for National Statistics. CPIH inflation, which accounts for owner-occupier housing costs, increased to 3.1% from 2.8%. Core CPI remained at 2.6%, while inflation in services slowed slightly to 3.4% from 3.6%. The Office for National Statistics is set to publish consumer price data for August on September 16, just a day prior to the MPC’s decision.
Inflation and economic growth shape the policy deliberations
Recent economic reports also point to ongoing UK growth. In July, gross domestic product increased by 0.4%, following a 0.3% rise in June and no change in May. Over the three months ending in July, real GDP grew by 0.4% compared to the previous quarter. Service sector output increased by 0.6%, whereas production and construction each declined by 0.5%. Since services constitute the largest part of the UK economy, their growth remains significant.
Quantitative tightening was initiated by the Bank in 2022, starting with the cessation of reinvesting maturing securities and later involving active gilt sales. Under the current cycle, the MPC has directed a reduction of £70 billion in gilt holdings from October 2025 through September 2026. Official figures indicated a gilt stock of £489.026 billion as of September 9, close to the £488 billion target. For the quarter from July to September, the Bank scheduled five auctions covering both short and medium-term gilts.
Annual review coincides with quantitative tightening cycle
The previous annual review 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 for active sales, allocating approximately 40% each to short and medium maturities and 20% to long-term gilts. The latest quarterly schedule omitted auctions for long-maturity gilts, but maintained short and medium maturities within the program.
This September, the same policy timeline addresses both the current interest rate setting and the annual balance-sheet review. Until a decision is made, the Bank Rate remains at 3.75%, and the £70 billion quantitative tightening cycle continues as the official plan. The Bank Rate influences borrowing costs and savings rates throughout the UK financial system, although commercial rates are also shaped by other factors. The upcoming announcement follows data from July showing higher consumer inflation, ongoing economic expansion, and the Asset Purchase Facility nearing its existing gilt-reduction target.