Bank of England Set to Hold Rates at 3.75% as UK Inflation Hits 3.1%
Updated
Updated · bbc.co.uk · Sep 16
Bank of England Set to Hold Rates at 3.75% as UK Inflation Hits 3.1%
3 articles · Updated · bbc.co.uk · Sep 16
Summary
Thursday’s Bank of England decision is expected to leave the benchmark rate at 3.75% for a sixth straight meeting, despite mounting pressure from faster price growth.
UK inflation rose to 3.1% in August from 2.9% in July—its highest in six months—as petrol, diesel and airfares climbed, with economists warning energy-led inflation has yet to peak.
Oil has stayed above $100 a barrel since 9 September, and Governor Andrew Bailey had already signaled rates could rise if the Iran war dragged on and crude remained elevated.
Markets are already pricing in tighter borrowing costs: major lenders have raised fixed mortgage rates, with the average two-year deal at 5.77% and the five-year at 5.83%, both recent highs.
The MPC also faces pressure from abroad after the ECB lifted rates to 2.5% and the Federal Reserve to 3.5%-3.75%, while trying not to further weaken jobs and household finances.