Bank of England Set to Hold at 3.75%, But Bailey Won’t Rule Out a Hike

The Bank of England is widely expected to hold its base rate at 3.75 percent when it announces its decision on Thursday, September 17. It has sat there since a July 30 hold, following the last of a series of cuts through late 2025. Most economists covering the meeting expect no change this month.

Financial markets disagree with that consensus more than usual. Pricing currently points to a quarter-point rise by the end of 2026, with two further increases penciled in for 2027. That is a notably more hawkish view than the Bank itself has offered in public.

Bailey pushes back

Governor Andrew Bailey addressed the gap directly on September 8, telling MPs the Bank has “no secret plan” to raise rates, pushing back on the idea that a hike is now inevitable. His comments read as an attempt to talk down market expectations that have run ahead of the Bank’s own guidance, a familiar tension between what a central bank says and what a rate-pricing desk assumes.

The disagreement matters for sterling. GBP/USD has traded near 1.3525 through early September, a level that already reflects some of that hawkish market pricing. A dovish tone in the Bank’s September statement, relative to what traders expect, would give the pound room to soften, while leaving the door open to tightening, even without committing to it, could let sterling extend its recent strength.

Either way, this is a meeting where the actual rate decision matters less than the language around it, and it lands only a day after the Federal Reserve’s own decision, so GBP/USD could be reacting to both banks’ tone within 24 hours of each other. Watch the vote split and the statement’s wording on inflation risk more closely than the headline number, since the headline number is the one thing almost everyone already expects.

Trader’s takeaway: don’t trade the headline rate on Thursday, since a hold is already priced in almost everywhere. Watch the vote split, how many of the nine MPC members vote for a hike, and Bailey’s tone in the press conference instead. Those two details are what usually moves GBP/USD on decision day, not the rate itself.

Further reading: the Bank of England’s own rate decision page and the House of Commons Library’s briefing on UK interest rates.