Bank Rate held at 3.75 percent in 6-3 vote alongside full QT exit
The Bank of England's Monetary Policy Committee voted 6–3 to hold Bank Rate at 3.75 percent on September 16, 2026. Three members backed a 25bp increase to 4.0 percent, while the committee unanimously approved a multi-year plan to reduce its £368 billion gilt portfolio to zero by 2034.
Hawks dissent as energy shock lifts inflation outlook
Andrew Bailey, Sarah Breeden, Swati Dhingra, Clare Lombardelli, Dave Ramsden, and Alan Taylor voted to hold Bank Rate at 3.75 percent, while Megan Greene, Catherine L Mann, and Huw Pill favored a 25bp hike to 4.0 percent.
The majority pointed to restrictive financial conditions and muted second-round effects, whereas the minority urged pre-emptive action to anchor expectations.
The rate decision comes as August CPI inflation reached 3.1 percent, triggering open letters between the Governor and the Chancellor.
Driven by Middle East conflict, Brent crude rose 36 percent to $106 per barrel and UK wholesale gas jumped 78 percent to 207 pence per therm, pushing projected inflation above 4.0 percent in early 2027.
A ten-year roadmap to close the bond facility
Alongside the rate decision, the MPC unanimously established a multi-year quantitative tightening plan to reduce its £488 billion Asset Purchase Facility gilt holding to zero by late 2034.
The Bank will permanently retain £120 billion of long-dated gilts to back banknote issuance.
The remaining £368 billion will unwind at an average pace of £46 billion annually through £20 billion in active sales and £222 billion in maturing bonds.
Direct sales to HM Treasury are under review, with auctions paused ahead of an operational announcement by April 2027.
A fragile truce on monetary restraint
The 6-3 split exposes growing committee unease over a compounding energy shock.
Locking in a decade-long balance sheet exit provides structural clarity while interest rate policy remains clouded.
Without swift geopolitical de-escalation, the majority's wait-and-see stance will prove difficult to maintain into 2027.