The Bank of England is widely expected to hold its Bank Rate at 3.75% for the rest of this year and through at least mid-2027, according to a Reuters poll of professional economists conducted between September 4 and 8. Poll respondents said inflation has not yet strengthened sufficiently to persuade a majority of Monetary Policy Committee members to support additional rate rises.
Respondents pointed to higher energy prices linked to the ongoing U.S.-Israeli conflict with Iran as a factor that may have pushed back any prospect of policy easing. Some economists said elevated oil prices could delay the timing of a cut to UK interest rates until late next year. Financial markets, by contrast, are pricing in three rate hikes through the middle of 2027, beginning in November.
Brent crude futures have been moving back toward the $100 per barrel mark as the conflict persists. To date, poll respondents noted, there is no clear sign that rising energy costs have started to feed through into broader inflation pressures across the economy, which continues to expand at a modest, steady pace.
"For the Bank, there are no flashing warning signs," said Gabriella Willis, UK economist at Santander CIB. Poll participants also highlighted the recent pick-up in global government bond yields, which has tightened financial conditions and added pressure on mortgage rates. That tightening gives policymakers additional latitude to observe how growth and inflation evolve over the coming months before making fresh policy moves.
All 65 economists surveyed expect the Monetary Policy Committee to keep policy unchanged at its September 17 meeting. A strong majority - 57 of 65 respondents, or nearly 90% - also expect rates to remain on hold for the rest of the year, the same proportion as in a survey held three weeks earlier. Eight economists in the poll anticipate a rate increase to 4.00% by year-end.
Since the war began in late February, a consistent majority of Bank of England watchers have expected no further rate rises this year, and that conviction has firmed in recent months. At the July MPC meeting three of the nine committee members voted for a rate rise, up from two at an earlier meeting - a split that the poll suggests is likely to persist at the upcoming meeting. That voting pattern underlines the upside risks to policy in the event inflation provides stronger signals that it is becoming more persistent.
Inflation was last reported at 2.9%, and the Bank has said it would consider action should evidence of second-round effects appear. "They said they would consider a move if evidence of 'second-round effects' started to appear, and, so far, that's not the case," Elizabeth Martins, UK economist at HSBC, wrote in a note. With one more inflation and labour market data release due before the September decision, HSBC judged that, on current information, conditions had not been met for those who had previously voted to raise rates to change their votes this month.
The poll's median projection for the MPC's next policy move is a quarter-point cut in the third quarter of 2027, a later timing than suggested in the August survey. James Moberly, senior UK economist at Goldman Sachs, expects inflation to peak at 3.3% in November - above the Bank of England's own projection - but he does not expect that peak to trigger significant concerns about second-round effects. He also forecasts inflation will decline more quickly than the Bank anticipates. "Given this outlook, we continue to think that market pricing for Bank Rate... looks too high. We instead expect the MPC to hold this year before cutting in 2027," he said.
The latest poll recorded only marginal changes to the panel's broader economic forecasts compared with the August snapshot. On average, economists expect inflation to come in at 3.1% this year before easing to 2.5% in 2027 and 1.9% in 2028. Growth projections in the survey show the UK economy expanding by 1.1% in 2026 and 1.2% in 2027, with a pickup to 1.5% in 2028.
Market participants and policymakers will be watching incoming data and developments in energy markets closely. The interaction among global bond yields, mortgage costs, and the pass-through of higher energy prices into domestic inflation will shape the policy calculus in the months ahead.