Faisal Islam
Economics editor

The Bank of England has kept interest rates at 3.75% as expected with a split of 6-3 to hold.

The Bank’s nine-member Monetary Policy Committee, on balance, has not seen the recent rise in energy prices pass through into wider inflationary pressures.

In a surprise move, the Bank of England has paused auctions of its remaining stock of £488 billion in government debt.

The Bank has put in place a long term plan to wind down the stockpile, built up during the financial crisis and Covid pandemic.

It has announced three notable moves, which require sign off from the Chancellor John Healey. First, £222bn long term debt held by the Bank will now be kept until it expires.

Second, £120bn of this will be kept permanently to back the Bank’s issuance of banknotes.

Lastly, the Bank will now not sell its government debt in the markets, but instead sell it effectively directly back to the government.

The net effect of all of this is that for now there will not be auctions in the markets, at a time of some painful rises in effective interest rates for governments. It might also help save some money in the short term for the public finances.

The Bank says the plan has been developed by it for the past year, based on winding down the emergency purchases of debt.

The Bank of England's Monetary Policy Committee was split 6-3 in its decision to hold interest rates at 3.75%.

Three members of the nine-member committee voted to raise its base interest to 4%, while the other six voted to hold it.

Dearbail Jordan
Senior business and economics reporter

The UK interest rate has been held at 3.75% by the Bank of England for the sixth time in a row despite rising inflation.

The decision was widely expected by economists but the seven-month long conflict in the Middle East has fuelled energy prices which, in turn, has stoked inflation.

Other major central banks have increased rates to counteract higher prices.

On Wednesday, the US Federal Reserve announced its first hike in three years while the European Central Bank has raised rates twice since June.

Inflation has been above the Bank of England's 2% target for nearly two years.

Image source, PA Media

Elsewhere in London, the new shadow chancellor Andrew Griffith is making his first speech since taking over the position from Mel Stride.

Asked if he would like to see the Bank of England slow down the selling of government bonds (we have more on this in our earlier post), he says that the Bank "must make its own decisions around how it operates in the market place".

But he adds that he would like to see long-term borrowing rates in England "not be significantly higher than countries like Greece or Italy".

"We can turn this around" and "start to balance the deficit", he says.

This, he says, will give the markets "the ability to see a way forward and to reduce the cost of long-term borrowing".

Dearbail Jordan
Senior business and economics reporter

You can never say with absolute certainty what the Bank of England will do when it comes to interest rates.

The consensus is it'll remain at 3.75%.

But that would make the Bank of England an outlier among its peers.

The European Central Bank has raised interest rates twice since June while on Wednesday night, the US Federal Reserve announced its first increase in three years.

So while the expectation is for a hold, its likely to split the committee of rate-setters at Threadneedle Street.

Kevin Peachey
Cost of living correspondent

We've had two weeks of mortgage rate rises across the major lenders, as they hike the cost of new fixed deals.

It is evidence of how lenders shift rates a lot - certainly more frequently than the MPC meets.

But despite the rises, as this chart shows, rates are still well short of the peaks of recent years.

The trouble for many homeowners and potential buyers is that, at the start of the year, they might well have expected mortgage borrowing costs to fall during 2026.

Kevin Peachey
Cost of living correspondent

Image source, PA Media

The Bank rate has a direct impact on mortgage repayments for borrowers on tracker and variable rate deals.

It also sets the tone for the direction of fixed-rate deals. The vast majority of homeowners have fixed deals, so the interest rate does not change until the end of the term, which is usually two or five years.

However, mortgage funding is complicated. So, pretty much all the major lenders have been raising the rates on new, fixed deals in recent days.

That's because the markets anticipate the Bank of England may need to increase the benchmark rate in the coming months, and so lenders' own funding costs are going up.

It means the average two-year fixed residential mortgage rate is at its highest since 22 May, at 5.83%, while the average five-year rate is at its highest since 6 November 2023, at 5.87%, according to financial information service Moneyfacts.

Dearbail Jordan
Senior business and economics reporter

Hello from the Bank of England in London, where BBC apprentice Anuk Weerawardana and I will find out if UK interest rates will rise, fall, or stay at 3.75%.

We'll also learn if the Bank is going to reduce or stop selling its massive trove of government bonds.

The Bank will make the announcement at midday - when BBC News will also publish a news story all about it. How does this happen at the same time?

The secret is journalists get to read the Bank's decision an hour or two before its wider release.

Because this is market sensitive information, the Bank of England locks us in its basement to prevent leaks.

Theoretically, a trader could make a lucrative bet on the decision if they had prior knowledge. To ensure nothing gets out, we have to hand over our mobiles and the wi-fi is switched off.

Between now and then, we'll read, ruminate and write, fuelled by lots of tea and too many biscuits. By the time 12:00 BST rolls around, the wi-fi is switched on - and our words wing their way to you.

See you on the other side.

On Wednesday, the US Federal Reserve raised its interest rate for the first time in more than three years. Our correspondent Samira Hussain looks at why:

Katie Hope
Business reporter

It’s not all about interest rates today, as the Bank of England will also tell us what it plans to do on bond sales.

The Bank bought a huge amount of bonds at a high price – essentially government IOUs – during the Covid pandemic and the financial crisis to keep the economy going.

It has since been selling them again, but at a loss due to higher borrowing costs.

If it decides to slow down the pace of sales - or even temporarily halt them - then these losses will be lower or stop altogether.

The move would be beneficial for the government’s finances, as the Treasury has to cover these losses.

So it could help Chancellor John Healey who is trying to free up money to fund spending at next month’s Budget.

Bank expected to hold rates - but there could be a surprisepublished at 11:01 BST

11:01 BST

Faisal Islam
Economics editor

I’m on my way into the Bank of England for an interest rate decision, as I have done - on and off! - for over a quarter of a century.

While the Bank is widely expected to hold rates at 3.75%, other major central banks - including the US Federal Reserve - are now raising rates, as rising energy prices feed into higher inflation.

The expectation among economists however is that the nine-member committee which decides rates will keep them on hold today, with a rise in November or December.

There is, though, the recipe for a surprise rise here.

The energy market scenario is tracking worse than the adverse scenario outlined by the Bank earlier in the year.

There have been splits in recent months, as the Bank weighs up whether rising inflationary pressures are largely contained in energy prices.

And the complex business of Bank of England’s sale of its stocks of government debts also looms large. It could help calm debt markets.

Government borrowing costs have risen substantially, into rather painful territory, in the UK and around the world in recent weeks.

At midday, the Bank of England will announce its latest decision on interest rates.

This is the base rate the Bank charges other lenders to borrow money. When it changes, it can affect the deals that High Street banks offer on mortgages, other loans - and savings accounts.

Despite turmoil in the Middle East - and a surge in oil prices - economists are expecting the Bank's Monetary Policy Committee (MPC) to hold the benchmark rate at 3.75% for its sixth consecutive meeting.

This comes after the US Federal Reserve decided on Wednesday to raise interest rates for the first time in more than three years, in a bid to slow rising prices there.

Also in focus is whether the Bank decides to slow down its sell-off of government bonds, which it bought in large quantities after the 2008 financial crisis - we'll have more on that soon.