Bank of England holds at 3.75%, signals a rise, and stops selling long gilts
Britain kept rates on hold in a split vote while rewriting the plan that governs how much long-dated debt it sells back to the market.
Assembled by Claude from 11 sources at 9 outlets · Thursday, September 17, 2026, Evening edition, 5:13 PM EDT · no human byline
What happened
The Bank of England left its main interest rate at 3.75% on Thursday after a 6-3 vote on the Monetary Policy Committee reuters.comcostar.com. Three of its nine policymakers wanted an increase euronews.com. The hold came even though UK inflation has risen to 3.1% qz.com, a five-month high euronews.com.
Separately, the Bank overhauled the way it unwinds quantitative easing. It paused sales of British government bonds for the next six months and halted sales of long-dated gilts entirely reuters.com. The Financial Times described the accompanying language as the Bank's strongest signal yet that rates are likely to rise ft.com, and Bloomberg framed the gilt decision as relief for a strained bond market bloomberg.com.
Why it matters to investors
The two decisions pull in opposite directions, and that is the point. On rates, the committee is closer to tightening than it has been: the Bank warned a hike may be needed if inflationary pressure intensifies as a result of the conflict bloomberg.com, and the AP read the minutes as a bank that appears ready to move soon apnews.com.
On supply, it moved the other way. Britain's borrowing costs fell at the fastest rate in Europe and the G7 on Thursday once the end of long-dated sales was confirmed telegraph.co.uk. Removing the Bank as a seller at the long end is a direct, mechanical easing of pressure on the part of the curve that pension funds and insurers price off, even as the policy rate stays put reuters.combloomberg.com.
What to watch
Governor Andrew Bailey acknowledged that elevated global energy costs had not yet fed through significantly into UK prices or wages qz.com. That is the pivot: the Bank is holding on the argument that the energy shock has not become a wage story, and the vote splits three ways against it.
The trigger the Bank named is external. It warned that a hike may be needed if inflation pressures intensify as a result of the conflict bloomberg.com, which makes the energy channel, rather than the domestic labour market, the variable that decides the next meeting.
The international context is tightening around that position. The European Central Bank raised rates last week, and higher borrowing costs have added to expectations that central banks will raise rates nytimes.com. Britain is now the one holding while its peers move, and the minutes marked a clear enough shift in tone that the AP read the committee as close to joining them apnews.com. The Bank has told the market which way it expects to break ft.com; what it has not said is when.
Sources
- reuters.com: Bank of England policymakers set out views on rates outlook - Reuters (2026-09-17)
- reuters.com: Bank of England halts long-dated gilt sales, rewrites plan to unwind QE | Reuters (2026-09-17)
- costar.com: Bank of England maintains base rate at 3.75% despite rising inflation - CoStar (2026-09-17)
- qz.com: Bank of England holds rates at 3.75% as U.K. inflation hits 3.1% - Quartz (2026-09-17)
- euronews.com: Bank of England holds rates at 3.75% in 6-3 split vote as inflation hits five-month high (2026-09-17)
- apnews.com: Bank of England holds rates but appears ready to hike soon - AP News (2026-09-17)
- nytimes.com: Bank of England Holds Rates Steady but Warns of Inflation Pressures - The New York Times (2026-09-17)
- telegraph.co.uk: Borrowing costs plunge after Bank of England halts bond sales - The Telegraph (2026-09-17)
- ft.com: Bank of England says rates likely to rise as it overhauls gilt sales - Financial Times (2026-09-17)
- bloomberg.com: Bank of England Eases Bond-Market Pain With Gilt Sales Overhaul - Bloomberg (2026-09-17)
- bloomberg.com: Bank of England Holds Rates, Warns of Hike if Iran War Persists - Bloomberg (2026-09-17)