Current Bank Rate 3.75%
Next due: 5 November 2026
Current inflation rate 3.1%
Target: 2%
Energy prices are still volatile due to the Middle East conflict and have risen further recently
That means inflation will rise further from its current level of 3.1%
The longer energy prices stay high, the greater the risk of more persistent inflation
Published on 17 September 2026
The Monetary Policy Committee is responsible for maintaining monetary stability by keeping inflation low and stable. It meets eight times a year to decide what level of Bank Rate is needed to return inflation to – or keep it at – the 2% target over time.
Key points:
- we have maintained Bank Rate at 3.75%
- conflict in the Middle East has disrupted the transportation and supply of energy, raising its price and pushing up households’ motor fuel costs and utility bills; and it is difficult to predict what is going to happen
- inflation has risen to 3.1% and we think it will go up even more as higher energy prices have their knock-on effects; higher bills could force businesses to increase their prices to cover the cost, for example
- so far, there is little evidence of significant knock-on effects on prices and wages; but the risk of them occurring and having a longer-term impact on the economy increases the longer energy costs stay high
- mortgage rates for households and borrowing costs for firms are higher than before the conflict, making people more cautious about spending; there are also more people looking for work than jobs available, so employers may feel less pressure to increase salaries; for now, this seems to be containing the effects of energy price rises and keeping overall inflation from going up as much
- we are monitoring the situation very closely; whatever happens, we’ll make sure that inflation gets back to the target in the medium term
Find out more
Read the latest Monetary Policy Summary and Minutes
Read our explainer on interest rates
Today, we’ve held Bank Rate at 3.75%. So far, higher global energy costs have had a limited effect on price and wage setting in the UK. But the longer this volatility persists, the bigger the impact it will have on inflation, and the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our 2% target.
Andrew Bailey, Governor
What are interest rates?
Interest is what you pay for borrowing money and what banks pay you for saving money with them.
If you are borrowing money, the interest rate (or lending rate) is the amount you are charged for doing so. If you are a saver, the interest rate (or savings rate) tells you how much money will be paid into your account.
Both are expressed as a percentage of the total amount you have borrowed or saved.
So, if you borrowed £100 with a 1% lending rate, you’d have to pay £101 a year later. If you put £100 into a savings account with a 1% interest rate, you’d have £101 a year later.
What is Bank Rate?
It is the core interest rate in the UK and it is our job to set it.
It is the rate of interest we pay to commercial banks, building societies and financial institutions that hold money with us. It is also the rate we charge on loans we may make to them. It, therefore, affects their own lending and savings rates. For example, when we raise the Bank Rate, banks will usually increase how much they charge their customers on loans and the interest they offer on savings. And the reverse if we lower it.
Bank Rate over time
Official Bank Rate history data from 1694How do interest rates affect inflation?
Interest rates influence how much people spend, and that affects how shops and businesses set their prices.
Higher interest rates mean higher payments on many mortgages and loans, meaning people must spend more on them and less on other things. Saving becomes more attractive because the returns are higher and it becomes more expensive to take out a loan. These things all discourage consumers and businesses from spending.
When customers spend less, businesses are less willing or able to raise their prices. When prices don’t go up so quickly, inflation falls.
Lower interest rates can have the reverse effect. If payments on mortgages and loans go down, people will have more money to spend on other things. Savers will get a smaller return and, therefore, may feel less motivated to put their money away. It will be also cheaper for potential borrowers to take out a loan – and use that money to make big purchases.
All of these factors encourage spending. When people spend more, this means demand is high. And when demand is high, businesses often raise their prices, pushing up inflation.
Monetary Policy Committee announcements
This page was last updated 18 September 2026