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Fed & Monetary Policy

Bank of England set to hold and slow its gilt sales as banks pencil in hikes

Surging oil is pulling the Bank towards tightening while record borrowing costs push it to ease off quantitative tightening.

Assembled by Claude from 11 sources at 9 outlets · Monday, September 14, 2026, Morning edition, 10:23 AM EDT · no human byline

Disclosure. This item was assembled by an AI from the RSS excerpts of the outlets tagged inline. No human wrote or checked it before publication. Feed selection and categories are editorial choices by Teresa Lo. Nothing here is investment advice.

What happened

The Bank of England looks set to keep interest rates steady this week despite surging oil prices, Reuters reported live.euronext.com. The market still widely expects the Bank to hold rates around 3.75 percent, leaving sterling bulls without a clear rationale moomoo.com. UBS expects a hawkish hold on Thursday, with the bigger story a shift in tone that leaves a future rise open proactiveinvestors.co.uk.

In sharp contrast to the European Central Bank this month, analysts do not expect the Bank to turn materially more hawkish at its September meeting kfgo.com. It is also poised to slow its bond sale programme, having conceded that the approach has pushed up record high borrowing costs cityam.com.

Why it matters to investors

Two Wall Street banks now expect increases regardless. Citigroup joined Goldman Sachs on Monday in forecasting Bank of England rate hikes later this year kfgo.com. Goldman turned more hawkish, forecasting a hike of 25 basis points in November 2026 as inflation persists thestandard.com.hk. City AM reported a top Wall Street bank warning that the Bank will raise rates to four per cent by the end of the year cityam.com.

The gap between a hold this week and hikes later matters for gilt supply. Slowing the sale of gilts eases one source of pressure on the long end while the policy rate stays put cityam.comlive.euronext.com.

What to watch

Fuel is the transmission channel. Petrol and diesel prices have hit their highest since 2022, according to the RAC, as oil prices remain elevated bbc.co.uk. Morningstar asked whether UK inflation will rise above 3 percent, noting that pump prices have risen meaningfully global.morningstar.com.

GB News reported economists warning that the Bank's patience is running thin after oil prices surged in the US-Iran war, making a rate rise likely gbnews.com. The decision lands in the same week as the Federal Reserve, adding to the pressure on sterling moomoo.com. The tone of the statement, rather than the rate itself, is what the market will trade proactiveinvestors.co.ukkfgo.com.

The two halves of the week's decision point in opposite directions, and that is the point. Holding the rate while slowing gilt sales treats the long end and the short end as separate problems: one driven by an energy shock the Bank cannot offset, the other by borrowing costs its own sales have helped push to records cityam.comlive.euronext.comgbnews.com. Whether Goldman's November call or the four per cent forecast proves closer will depend on how far pump prices carry into the inflation print thestandard.com.hkcityam.comglobal.morningstar.com.

Sources

  1. live.euronext.com: Bank of England set to hold rates steady, slow QT | live - Euronext Markets (2026-09-14)
  2. kfgo.com: Bank of England set to hold rates steady, slow QT | The Mighty 790 KFGO (2026-09-14)
  3. kfgo.com: Citigroup, Goldman forecast BoE rate hikes amid rising inflation | The Mighty 790 KFGO (2026-09-14)
  4. thestandard.com.hk: Goldman Sachs sees BoE rate hike in November amid inflation concerns (2026-09-14)
  5. proactiveinvestors.co.uk: Bank of England set for hawkish hold as inflation risks resurface, says UBS | The Markets (2026-09-14)
  6. cityam.com: Bank of England poised to slow bond sale programme - City AM (2026-09-14)
  7. cityam.com: Bank of England predicted to raise interest rates this year - City AM (2026-09-14)
  8. moomoo.com: The pound sterling faces pressure ahead of the Bank of England and Federal Reserve ... - Moomoo (2026-09-14)
  9. global.morningstar.com: Will UK Inflation Rise Above 3%? | Morningstar UK (2026-09-14)
  10. gbnews.com: Interest rate rise likely as Bank of England 'patience running thin' after oil prices SKYROCKET (2026-09-14)
  11. bbc.co.uk: Petrol and diesel prices hit highest since 2022 (2026-09-14)