BoE holds Bank Rate at 3.75%

The Bank of England kept its Bank Rate at 3.75% on September 17 after the Monetary Policy Committee voted 6-3 to hold. Three members favoured lifting the rate by 0.25 percentage points to 4%, Mettis Global reported. The committee pointed to a protracted Middle East conflict as the cause of higher crude oil and refined fuel prices since its previous meeting.

Consumer price inflation in Britain reached 3.1% in August, and the central bank expects it to keep rising in the quarters ahead. Policy is being set to return inflation to the 2% target on a sustainable basis as the economy absorbs the energy shock. The MPC also judged that the risks to the inflation outlook now lean further to the upside than they did in July.

In a separate decision, the committee unanimously agreed to shrink its holdings of UK government bonds, bought for monetary policy purposes, to zero. The unwind will take place over several years, with the remaining stock shrinking by an average of £46bn a year until the end of 2034, through £20bn of annual sales alongside maturing gilts. The committee said it was prepared to act as required to keep inflation on course for the 2% target over the medium term.