Bank of England holds interest rate at 3.75% as inflation climbs past 3%

The Bank of England opted to keep its benchmark interest rate unchanged at 3.75% on September 17, marking the sixth consecutive hold since the central bank last cut rates in December 2025. The decision lands at an uncomfortable moment: UK inflation just hit 3.1% in August, blowing well past the government’s 2% target and crossing the 3% threshold for the first time since March. What makes this one interesting isn’t the hold itself. It’s the fracture inside the Monetary Policy Committee. The vote split 6-3, with three members pushing for a 25 basis point hike to 4.0%. Rising fuel costs are doing the heavy lifting The primary culprit behind the inflation surge is rising motor fuel prices. The BoE points to ongoing geopolitical tensions in the Middle East and persistent supply chain disruptions as the forces driving energy costs higher. The committee’s own projections paint a picture that doesn’t exactly scream “transitory.” The BoE expects inflation to reach 3.75% by the end of 2026 and potentially surpass 4% in early 2027, driven primarily by continued volatility in global energy markets. The MPC did note that, so far, there are limited signs of second-round effects. That’s central ...