LONDON / RankWire.AI / – The Bank of England enters its September policy meeting with Bank Rate at 3.75% and inflation above its 2% target. The Monetary Policy Committee will publish its next interest rate decision on September 17. The meeting will also include the Bank’s annual review of quantitative tightening, which reduces its stock of government bonds. The current £70 billion bond-reduction cycle runs through September, and the Bank has not announced the next annual target.
At its July meeting, the nine-member Monetary Policy Committee voted 6-3 to keep Bank Rate at 3.75%. The three dissenting members supported a 25-basis-point increase to 4%. That vote left borrowing costs unchanged after earlier rate reductions from the 5.25% peak reached in 2023. The Bank of England said monetary policy remained focused on returning consumer price inflation sustainably to the government’s 2% target.
UK consumer price inflation rose to 2.9% in July from 2.6% in June, according to the Office for National Statistics. CPIH inflation, which includes owner-occupier housing costs, increased to 3.1% from 2.8%. Core CPI remained at 2.6%, while services inflation eased to 3.4% from 3.6%. The Office for National Statistics will publish August consumer price data on September 16, one day before the MPC decision.
Inflation and growth frame the policy meeting
The latest economic data also showed continued UK growth. Gross domestic product increased 0.4% in July after rising 0.3% in June and showing no growth in May. Real GDP also grew 0.4% in the three months through July compared with the previous three-month period. Services output rose 0.6% over that period, while production and construction each fell 0.5%. Services account for the largest share of the UK economy.
The Bank began quantitative tightening in 2022 after ending reinvestment of maturing securities and later starting active gilt sales. Under the current cycle, the MPC ordered a £70 billion reduction in gilt holdings between October 2025 and September 2026. Official data put the stock at £489.026 billion as of September 9, close to the £488 billion target. For the July-to-September quarter, the Bank scheduled five sales auctions across short and medium maturity gilts.
Quantitative tightening reaches annual review point
The previous annual review had already reduced the pace of quantitative tightening. In September 2025, the MPC lowered the annual gilt-reduction target to £70 billion from £100 billion in the preceding cycle. It also changed the planned maturity mix of active sales. The Bank allocated about 40% each to short and medium maturity gilts and 20% to long maturities. Its latest quarterly schedule included no long-maturity gilt auctions, while short and medium maturities remained in the program.
The September meeting brings the current interest rate setting and annual balance-sheet review onto the same policy timetable. Until the decision appears, Bank Rate remains 3.75% and the £70 billion quantitative tightening cycle remains the official program. Bank Rate influences borrowing and savings costs across the UK financial system, although commercial rates also reflect other factors. The September announcement follows July data showing higher consumer inflation, continued economic growth and an Asset Purchase Facility approaching its existing gilt-reduction target.