The Bank of England will next meet on 21st September 2023 to decide what level interest rates should be set at. Britain’s central bank lifted rates to 5.25 percent, the highest since 2008, as it warned that some risks from persistent inflation had “crystallized.”

At its meeting ending on 2 August 2023, the MPC voted by a majority of 6–3 to increase Bank Rate by 0.25 percentage points, to 5.25 per cent. Two members preferred to increase Bank Rate by 0.5 percentage points, to 5.5 per cent, and one member preferred to maintain Bank Rate at 5%.

Pressure is on the Bank to increase rates or risk further increases in pay, sending inflation higher. Bank rates are predicted to increase to 6 per cent and average just over 5.5 per cent over a 3-year forecast period.

Wage inflation remains high, largely due to public sector increases including the NHS and Whitehall.

Inflation is currently sitting at 6.8 per cent. However, the central bank expects inflation to fall significantly further to around 5% by the end of the year after a sharp fall to 6.8% in July from 7.9% in June. The ONS inflation figure for August will be released on 20th September. 

Key Date: 21st September 2023

Prediction: Increased to 5.5 per cent.

Why do interest rates matter to me?

UK Inflation CPIH 12-month rate - Jul 2023: 6.4%↓ -0.9pp on previous month

UK GDP Quarter on Quarter: Apr - Jun 2023 - 0.2% ↑ 0.1pp on previous quarter