As expected, the Bank of England Monetary Policy Committee voted 6-3 to hold rates steady at 3.75 per cent, but cautioned that tightening is likely given continued conflict in the Middle East and elevated energy costs. Governor Andrew Bailey noted "limited effect" of higher global energy costs on UK prices and wages so far, but warned the impact on inflation will be greater if the conflict persists, which "appears to be the case." A rate rise at the November meeting is likely absent a resolution that brings down energy costs.

The majority, led by Bailey, cited increased upside risk to inflation while maintaining it was appropriate to hold given tighter financial conditions and little evidence of meaningful second-round effects. Sarah Breeden, who voted to hold, said the worsening outlook makes "material second-round effects more likely." Dovish member Alan Taylor argued policy should respond to evidence of propagation rather than "mechanically to volatile ticks in headline energy prices." Hawkish member Megan Greene said the risk of persistent inflation from second-round effects rose since July, noting "energy prices remain closest to our adverse scenario."

The BoE also announced its quantitative tightening plan, targeting an average annual unwind of £46bn through 2034, including £20bn of active gilt sales per year for gilts maturing between 2035 and 2049. Gilt holdings for monetary policy purposes will reach zero by 2034. Government agreement on the plan is expected only in April 2027, delaying active sales until then.