Bank of England holds interest rates at 3.75% but warns war could force future rises
News Source
β’Thu, 17 Sep 2026 12:04:07 GMT
π° What Happened
The Bank of England has kept interest rates at 3.75 percent. But it warned that a long war in the Middle East could force it to raise them later. Six of the nine members of its rate-setting committee voted to hold, while three wanted a rise.
The Bank also said it will sell billions of pounds of government bonds back to the Treasury. It wants to avoid upsetting the bond market before next month's budget. Governor Andrew Bailey said higher energy costs have had only a limited effect so far.
π The Backstory
Interest rates are the main tool central banks use to control inflation, which is the speed at which prices rise. Higher rates make borrowing cost more, which cools spending and slows price rises. Lower rates help the economy grow.
The war has pushed global oil prices back above $100 a barrel. UK inflation reached 3.1 percent in August, driven by fuel prices. Mortgage rates have already gone up, even before the base rate changes.
π― Why It Matters
Rates decide what you pay on a mortgage, a car loan or a credit card. Talk of higher rates means those repayments could get more expensive.
The Bank of England has kept interest rates at 3.75 percent. But it warned that a long war in the Middle East could force it to raise them later. Six of the nine members of its rate-setting committee voted to hold, while three wanted a rise.
The Bank also said it will sell billions of pounds of government bonds back to the Treasury. It wants to avoid upsetting the bond market before next month's budget. Governor Andrew Bailey said higher energy costs have had only a limited effect so far.
Interest rates are the main tool central banks use to control inflation, which is the speed at which prices rise. Higher rates make borrowing cost more, which cools spending and slows price rises. Lower rates help the economy grow.
The war has pushed global oil prices back above $100 a barrel. UK inflation reached 3.1 percent in August, driven by fuel prices. Mortgage rates have already gone up, even before the base rate changes.
Rates decide what you pay on a mortgage, a car loan or a credit card. Talk of higher rates means those repayments could get more expensive.