The Bank of England has elected to leave interest rates unchanged despite evidence of rising inflation.
The British central bank voted 6-3 in favour of holding the country’s Bank Rate steady at 3.75%. The three dissenters voted for a 25-basis point increase to 4%.
In a statement, the Bank of England warned that a rate increase is becoming increasingly likely as inflation remains stubbornly above its 2% target.
Financial markets had priced in a 76% chance that the central bank would hold interest rates steady at its latest policy meeting.
However, markets and economists widely expect a hike of at least 25 basis points at the Bank of England’s next meeting in November of this year.
The hold by the British central bank comes a day after the U.S. Federal Reserve announced a quarter-point interest rate increase, its first raise since 2023.
A week ago, the European Central Bank (ECB) announced its second interest rate increase of the year, after previously raising rates in June.
The Bank of England’s decision to remain on the sidelines comes with inflation in the United Kingdom (U.K.) currently at an annualized rate of 3.1%.
The Bank of England last changed interest rates in December 2025, when it voted for a 25-basis-point cut.
The U.K. Office for National Statistics (ONS) has said that the current inflation rate is largely due to rising fuel costs, which surged 23% year-over-year in August due to the Iran war.
Yields on British government bonds fell immediately after the latest interest rate decision was announced, with the benchmark 10-year U.K. government bond yield dropping to 5.2473%.
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