Bank of England holds rates at 3.75% but warns of future rise
The Bank of England kept borrowing costs at 3.75% for a sixth meeting, warning that rising inflation could force a rate hike soon.
The Full Story
A plain summary built from the channels that reported this story.
The Bank of England left interest rates at 3.75% for a sixth consecutive meeting, choosing not to follow the US Federal Reserve and other central banks that have raised borrowing costs. The decision was split, with six members of the Monetary Policy Committee voting to hold and three voting to raise rates to 4%. Governor Andrew Bailey warned that the longer high energy prices persist, the more difficult the choice becomes, and that policy may have to tighten if the Middle East conflict continues to push up oil and gas costs.
The hold comes a day after the Fed raised its benchmark rate by a quarter of a percentage point to a range of 3.75% to 4%, its first increase in three years. The European Central Bank has also moved, and the Bank of Japan is expected to follow. The BoE's decision reflects its view that, while inflation is rising, the increase has not yet spread into wages or the wider economy. It projects inflation will reach 4% early next year, up from 3.1% in August, and expects energy bills to jump by about £400 from January as the price cap rises by 24%.
Households are already feeling the pressure. Mortgage rates have been climbing for months, with the average five-year fixed deal now around 5.87%, up from 2.63% in September 2021. Lenders are pricing in expected future rate rises. For someone remortgaging, monthly repayments could rise by hundreds of pounds. Experts advise locking in a fixed rate up to six months before a current deal ends, because rates can be repriced downwards but not upwards.
The Bank also announced a change to its programme of selling government debt. It will pause auctions of its stockpile, a move that helped calm gilt markets and lower UK borrowing costs. The bank said it still intends to sell the debt, but at a slower pace and with a portion kept back to cover banknote issuance. The change is seen as supportive for the government ahead of the autumn budget, though the Treasury faces pressure over spending and tax.
The shadow chancellor, Andrew Griffith, used the day to urge the government not to raise taxes in the budget, arguing that businesses are already struggling. He said the chancellor should rule out new taxes on small businesses and the self-employed. The political backdrop remains difficult, with rising energy costs and a war in the Middle East threatening the cost of living.
On screen
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Key Claims
Claims reported during this story's coverage, mapped by channel. Ordered by how many channels carried each claim.
| Claim | Channel 5 | BBC News | BBC One | BBC Two | Channel 4 | ITV | Sky News |
|---|---|---|---|---|---|---|---|
| The Bank of England has held interest rates at 3.75% since December. | |||||||
| The average five-year fixed mortgage rate was reported at 5.87%. | · | · | · | ||||
| The Bank of England hinted that interest rates will go up in the near future. | · | · | · | ||||
| Bank of England Governor Andrew Bailey warned that policy might need to tighten if the Middle East conflict continued. | · | · | · | · | |||
| The Bank of England paused auctions of its government debt stockpile. | · | · | · | · | |||
| The energy price cap was expected to rise significantly in January. | · | · | · | · | |||
| A rate hold was widely expected ahead of the Bank of England decision. | · | · | · | · | · | ||
| Fed chair Kevin Warsh said inflation has been above target for more than five years. | · | · | · | · | · | ||
| Interest rates are expected to rise in the coming months. | · | · | · | · | · | ||
| Markets expected about three interest rate rises by the middle of next year. | · | · | · | · | · | ||
| Mortgage rates have risen by nearly 1% since the conflict began. | · | · | · | · | · | ||
| The Bank of England expects inflation to top 4% at the beginning of next year. | · | · | · | · | · |
Channel Perspectives
What each channel focused on, with key quotes.
Focused entirely on the US Federal Reserve's decision to raise rates by a quarter point, the first hike in three years, and the political pressure from President Trump. It provided expert analysis of the Fed's credibility battle but did not cover the Bank of England's decision.
- “The Federal Reserve has raised interest rates for the first time in three years.”
- “The White House has called the hike unfortunate.”
- “Fed chair Kevin Warsh has chosen credibility on monetary policy over political comfort.”
Set the scene for the Bank of England decision, noting it was widely expected to hold, while highlighting the Fed's hike and its political consequences. Included an economist arguing the Fed acted to preserve its anti-inflation credibility.
- “The Bank of England will make its latest call on interest rates today. It's widely expected to hold the cost of borrowing this time, despite facing an increasing rate of price rises.”
- “The Fed raised its benchmark rate by a quarter of a percentage point and indicated it could do so again before the end of the year.”
- “The guy Donald Trump handpicked to run America's central bank has just done the very thing the President did not want him to do.”
Compared the BoE and Fed decisions through the lens of central bank credibility, with charts showing inflation above target for years. Noted that the BoE was expected to hold for a sixth time, but that the Fed's hike raised the stakes.
- “Right now, the interest rate currently stands at 3.75%, and it is widely expected to be kept on hold for the sixth consecutive time, having remained at that rate since December.”
- “The answer to that question comes down to credibility.”
- “Whatever the Bank of England does today, it might only marginally alter these long-term 30-year borrowing costs.”
Lead with breaking news of the BoE hold, framing it as a sixth consecutive hold after the Fed's first rise in three years. Brief on the vote and the context, before moving to other stories.
- “We start the programme with some breaking news. From here in the UK, we have just heard that the Bank of England has held interest rates at 3.75% for a sixth consecutive meetings.”
- “This all comes after the US Federal Reserve announced its first rate rise for three years on Wednesday.”
Concise summary of the BoE decision, noting the split vote and the governor's warning about the Middle East conflict. No extra analysis within the summary, but clear on the key facts.
- “In the last few minutes, the Bank of England has voted to leave interest rates unchanged.”
- “The decision was split six votes to three and the Bank's Governor Andrew Bailey warned policy might have to tighten if the Middle East conflict went on for much longer.”
Focused on the political and economic consequences of the BoE hold, with a panel debating interest rate policy, the government's budget, and the UK's reliance on imported energy. Highlighted concerns that rate rises may not fix supply-side inflation.
- “The Bank of England holds interest rates for now, but are increases in the cost of borrowing inevitable in the coming months?”
- “We've had the Strait of Hormuz, this sort of maritime choke hold now.”
- “I think we need to change the remit of the Bank of England fundamentally.”
Very brief mention of the BoE hold, tying it to rising global energy prices and rate rises elsewhere. Also included a separate story about Trump threatening tariffs over EU-Canada plans.
- “to keep the rate at 3.75%, despite a backdrop of increasing global energy prices and interest rate rises right around the world.”
Explained the BoE hold in accessible terms, with deputy economics editor Darshini David predicting a possible rate rise before Christmas. Highlighted rapid increases in oil and wholesale gas prices.
- “So rates on hold for now, but maybe not for too much longer.”
- “In the last six weeks alone, we have seen the price of crude oil up by over a third, the price of wholesale gas costs up by over 78%.”
- “The market is bracing for a rate rise before Christmas.”
Consumer-focused coverage of the BoE hold, emphasising that fixed mortgage rates have already risen and providing practical advice for those remortgaging. Stressed the bank's warning about pressure from the US-Iran war.
- “Interest rates have been held for the sixth time in a row.”
- “The bank did warn that the pressure to raise rates is building due to the ongoing US Iran war.”
- “Every 0.25% rise in rates for an average two-year fix adds £456 to repayments annually.”
In-depth economic analysis by Faisal Islam, focusing on the split vote, the surprise pause in government debt sales, and the broader oil shock. Included an interview with former BP strategist Nick Butler about energy prices.
- “They have not followed other major central banks which have raised rates. They have held it at 3.75%.”
- “The bottom line is they have paused the auctions, the Bank of England does, of its stock of government debt.”
- “It is complicated.”
Reported the BoE hold with the split vote, highlighted the governor's warning, and provided analysis on market expectations for future rate rises. Also covered the shadow chancellor's speech.
- “The Bank of England has held interest rates again at 3.75%, despite yesterday's jump in inflation.”
- “The decision was split with six policymakers voting to hold, three wanting rates increased to 4%.”
- “the bank is signaling that it is ready to deal with that higher inflation.”
Explained the BoE decision for a general audience, focusing on mortgage impact and the split vote. Reported the bank's debt absorption as a positive for government finances, and included advice to remortgage early.
- “It's not every day We take an interest in interest rates but today's decision by the Bank of England to keep the base rate at three point seven five percent when energy costs and Inflation are rising rapidly is important.”
- “There's a pretty heavy hint from the Bank of England today that interest rates will be going up in the near future.”
- “Three members of the Monetary Policy Committee Voted to raise rates, but six voted to keep it the same.”
Straightforward report of the BoE hold, with Faisal Islam using charts of oil traffic to show supply disruption. Noted the pause in government debt sales and the governor's warning.
- “The Bank of England has held interest rates as expected at three point seven five percent for the sixth time in a row.”
- “But the bank is under pressure to raise rates in an effort to tackle rising inflation.”
- “The longer this goes on the more difficult this becomes.”
Emphasised the impact on households, with a report on rising mortgage rates and the bank's governor describing the world as 'hugely unpredictable'. Provided practical advice for those remortgaging.
- “As seasons change, there are gathering clouds over the Bank of England.”
- “The world is hugely unpredictable at the moment.”
- “A lot of householders will be pleased that the Bank of England has not increased interest rates today. But mortgage firms are already raising the rates they charge customers.”
Analytical report on the BoE's warning of 4% inflation and a 24% rise in energy prices, alongside the gilt market calming after the bank's debt sales change. Included comment that the bank should not necessarily follow other central banks.
- “Around the world, central banks are hunkering down against the incoming storm, and today it was the Bank of England's turn to show how it plans to keep inflation in check.”
- “Despite the decision by the US Federal Reserve to hike, the bank said it would hold interest rates at 3.75%, but warned inflation would climb to 4% and energy prices saw 24%.”
- “The Bank of England's interest rate is a very important tool, but it's quite a blunt instrument.”
Repeated the mortgage-focused report from ITV Lunchtime and Evening News, adding that the bank's implicit warning means rates will go up if the Iran war continues. Also covered other news like Noah Woods and RNLI.
- “the Bank of England's decision today to leave interest rates where they are there was an implicit warning from its governor if America's war on Iran doesn't end they'll be going up next time for sure.”
- “for many mortgage payers they already have.”
- “The world is hugely unpredictable at the moment.”
Panel discussion on the economic outlook, with data editor Ed Conway showing interest rate expectations climbing and energy bills set to rise by more than £400. Panellists debated the causes and whether the bank was right to hold.
- “This was the latest interest rate decision from the Bank of England.”
- “they are going to rise by 24% in the spring”
- “the cost of living crisis that we thought had come to an end, well, it is kind of rearing its head again.”
Broadcast Timeline
News broadcasts tracked for this story, in time order.