Bank of England holds interest rates at 3.75%

A split decision by the Bank of England's nine-member Monetary Policy Committee has held interest rates at 3.75%. The 6-3 decision came in spite of the Office for National Statistics reporting UK inflation accelerating to 3.1% the day before. July's inflation rate was 2.9%.

Rising fuel prices due to war in the Straits of Hormuz, along with US tariffs, have seen global pressures on prices, with the UK's position exacerbated by poor domestic growth.

Businesses and homes have been put on notice by the Bank's governor, Andrew Bailey. He warned that should inflation move towards 4%, the Bank was likely to change its position.

In a surprise move, the Bank also announced that it was suspending an expected sale of £488 billion of government debt. £120 billion would be held to back the Bank’s issuance of banknotes. Other gilts would be sold to the market at a slower rate.

The Bank of England's decision came after the US Federal Reserve lifted borrowing costs for the first time since 2023.

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