Bank of England Set to Hold Rates Through Year-End, Reuters Poll Shows

A new Reuters poll shows 90% of economists expect the BoE to hold rates at 3.75% for the rest of 2026 — up from 83% last month. Here’s why the consensus hardened.

The Bank of England looks set to sit tight for the rest of 2026, and the consensus behind that view is getting stronger, not weaker. Per Investing.com’s coverage of the Reuters poll, the Bank will leave rates unchanged at 3.75% for the rest of the year according to a strong majority of economists, who have held that view since the war began in late February. Nearly 90% — 56 of 64 respondents — now expect no change through year-end, up from 83% last month, with six expecting a hike and two a cut; no one in the poll, conducted August 13–18, expects a September move.

Key Takeaways

• A Reuters poll of 64 economists (Aug 13–18) shows 56 now expect the BoE to hold Bank Rate at 3.75% through year-end — 90%, up from 83% last month.
• No economist in the poll expects a rate change at the September MPC meeting.
• The consensus has held since the US-Israeli war on Iran began in late February, with little evidence yet of energy-price spillover into the broader economy.
• Markets remain slightly more hawkish than economists, still pricing some chance of a rise by year-end.
• The BoE’s own guidance flags rising Q3/Q4 inflation risk tied specifically to Middle East energy prices.

The consensus is driven less by domestic demand and more by an external variable the Bank has flagged repeatedly. Per the same Reuters poll coverage, the UK economy has stayed mostly resilient since the war began, with little evidence of energy-price spillover into the broader economy — giving the Bank room to stay on the sidelines.

That resilience is fragile by the Bank’s own admission. According to an August 2026 review from Hanbury Wealth, the MPC voted six-to-three at its July 30 meeting to hold at 3.75%, with policymakers signaling rates could rise if Middle East-linked inflationary pressure intensifies; Governor Andrew Bailey said inflation had fallen faster than expected, but the conflict continues to mean high and volatile energy prices that will push inflation back up later in the year. The Bank’s own trajectory reflects this: per the House of Commons Library’s inflation briefing, based on mid-June energy pricing, the Bank projected CPI at “a little under 3%” in Q3 2026 and “a little over 3¼%” in Q4 — a downgrade from its April forecast.

There’s a genuine two-sided risk the poll’s headline framing tends to flatten. On the downside for inflation, the same House of Commons briefing notes that if Middle East energy disruption proves short-lived and oil and gas prices decline, inflation could instead fall from a September 2026 peak toward the Bank’s 2% target by Q2 2027. On the upside risk, HSBC UK economist Elizabeth Martins told Reuters (via Investing.com) that “a big rebound in energy prices would certainly change things.”

Markets aren’t as settled as the economist consensus: per the same poll coverage, financial markets are still pricing in one quarter-point rate rise by year-end — a genuine gap between what economists expect and what traders are hedging against, reported by outlets as two separate data points rather than connected explicitly.

Underlying data support a “resilient but fragile” framing. A KPMG-cited economic overview from Opus Business Advisory Group shows GDP grew 0.7% in the three months to May, slightly down from 0.8% in April, while core inflation fell more than expected in the twelve months to June, reaching its lowest rate since March 2025 — evidence the disinflation trend independent of energy hasn’t reversed. Separately, the House of Commons Library data shows food price inflation eased to 1.7% in June, its lowest since August 2024, reinforcing that the risk is concentrated in energy rather than broad-based prices.

Why It Matters

For borrowers, a prolonged hold at 3.75% keeps mortgage costs elevated relative to sharper-cut scenarios floated earlier in the year. For savers, it sustains relatively attractive cash returns. For the government, Opus’s review notes Prime Minister Andy Burnham has pledged a £2 bus-fare cap and removal of VAT from household electricity bills from October while maintaining existing fiscal rules and avoiding tax rises — a combination that gets harder to fund if borrowing costs stay elevated through year-end.

Data and Evidence

• Bank Rate: held at 3.75% since the July 30 MPC vote (6-3)
• Reuters poll: 56 of 64 economists (90%) expect no change through year-end, up from 83% last month
• BoE inflation forecast: ~3% Q3 2026, ~3.25%+ Q4 2026
• GDP growth: 0.7% in the three months to May 2026
• Food inflation: 1.7% in June 2026, lowest since August 2024

Global Impact

A UK central bank holding firm against energy-driven inflation risk is a data point other energy-importing economies — including Pakistan and much of South and Southeast Asia — are watching as a template for treating Middle East-linked price shocks as transitory.

What Happens Next

The next live decision point is the September MPC meeting, where the poll shows unanimous expectation of no change. The Q3/Q4 inflation prints will show whether the Bank’s own ~3.25% forecast materializes — and whether the hold consensus survives contact with that data.

Frequently Asked Questions

What is the UK’s current interest rate?

3.75%, unchanged since July 30, 2026.

Why isn’t the BoE cutting further?

Concern that Middle East-driven energy prices could push inflation back up in H2 2026.

Will UK mortgage rates change soon?

Based on the current poll, no near-term move is expected.

What would change the outlook?

A significant rebound — or further de-escalation — in Middle East energy prices.

Do markets agree with economists?

Not entirely — traders still price some chance of a year-end rate rise.