The US has raised rates. What will the Bank of England do on Thursday?

America's central bank has put rates up for the first time in three years to fight energy-driven inflation. The UK is facing the same pressures, and the Bank of England is getting more hawkish. Ahead of Thursday's decision, here's what the parallels tell us, what to watch for, and what each outcome could mean for your mortgage.

The Bank of England announces its decision on Thursday 17 September at 12 noon, and we'll update this article once it's out.

US Federal Reserve

3.75–4.00%

Raised by 0.25% on 16 September, a unanimous 12–0 vote

Bank of England

3.75%

Held since December 2025, but three of nine voted for a rise in July

What happened in the US

On Wednesday the Federal Reserve lifted its benchmark rate by a quarter point to a range of 3.75% to 4%. It's the first rise since July 2023, and it undoes one of the three cuts the Fed made last year.

The politics made it headline news. Fed Chair Kevin Warsh was appointed by President Trump, who has repeatedly called for lower rates, yet not a single member of the committee voted against the rise. The Fed's own projections also suggest most officials expect another increase before the end of the year.

The reason is inflation. The conflict in the Middle East has pushed oil above $100 a barrel and sent fuel prices sharply higher. US inflation, which was 2.4% at the start of 2026, has been running well above the Fed's 2% target ever since.

Same shock, two economies

The UK has been hit by the same energy shock, but the pattern has been different. US inflation spiked earlier and harder, peaking at 4.2% in May. UK inflation dipped through the spring before turning up again over the summer.

Annual inflation, UK vs US, 2026

Consumer Prices Index, % change on a year earlier

UK US 2% target (both)

Part of the reason for the gap is timing. American drivers feel oil prices at the pump almost immediately, while much of the UK's energy cost reaches households through the Ofgem price cap, which only changes every quarter. July's 13% cap rise pushed UK inflation back up to 2.9%, and rising petrol and diesel prices took it to 3.1% in August. The cap is due to rise again by 4% in October.

There's a more reassuring detail underneath the headlines. Core inflation, which strips out volatile food and energy prices, is much calmer in both countries: 2.4% in the US and 2.6% in the UK in August. That suggests the problem so far is mainly energy, rather than prices rising across the board.

The Bank of England is edging towards a rise

UK Bank Rate has sat at 3.75% since December, so on the surface nothing has changed. But the way the nine members of the Monetary Policy Committee vote tells a different story. In February, four of them wanted a cut. By July, three wanted a rise. The committee has moved roughly one vote further in the hawkish direction at each meeting since March.

How the Bank of England's rate-setters have voted in 2026

Voted to cut Voted to hold Voted to raise

February 5–4 hold

March 9–0 hold

April 8–1 hold

June 7–2 hold

July 6–3 hold

September 12 noon Thursday

The three July hawks were Chief Economist Huw Pill, Megan Greene and Catherine Mann. Pill has said publicly he's uncomfortable with simply waiting to see what happens. Governor Andrew Bailey has pushed back, telling MPs earlier this month that there's no hidden plan to raise rates and that decisions will depend on how energy prices and events unfold.

Before the Middle East conflict began, markets expected two UK rate cuts this year. They're now considering the possibility of rises instead. Most economists still expect a hold on Thursday, but August's inflation rise, released the day before the decision, gives the hawks a stronger hand.

What to watch for on Thursday

The headline decision is only half the story. The vote split, and what the Bank says about energy prices, will tell you where rates are likely to head next. Here are the three most likely outcomes.

Does a US rate rise affect UK rates?

Not directly. The Bank of England sets rates for the UK economy, and it won't raise Bank Rate just because the Fed has. But what happens in the US does travel across the Atlantic in a few important ways.

1. A shared causeThe same oil and gas prices are pushing up inflation in both countries, so both central banks are weighing similar risks.
2. Global borrowing costsUS government bond yields influence bond markets worldwide, including UK gilts.
3. The poundHigher US rates can strengthen the dollar. A weaker pound makes imports like fuel more expensive, adding to UK inflation.
4. Swap ratesLenders price fixed-rate mortgages largely from swap rates, which move on what markets expect rates to do next, often before Bank Rate itself changes.

That last point matters most for borrowers. Fixed mortgage rates don't wait for the Bank of England to act. If markets start to believe UK rates will rise, fixed deals can become more expensive weeks or months before any official decision.

What we don't know

None of this is certain. Some economists argue the Bank of England may not be as hawkish as it looks. The Bank has said it's most concerned about how long energy prices stay high, and energy prices have been extremely volatile throughout this conflict. If they fall back, the case for a UK rise weakens quickly. There's also little sign yet that higher energy costs are spreading into wider prices, which is what would really worry rate-setters.

History offers a note of caution too. It's unusual for the Fed to raise rates only once, but it has happened: in 1997, a single rise was followed by a long pause after events elsewhere changed the picture.

So the honest answer is that the direction of risk has shifted. A year ago the conversation was about how fast rates would fall. Today it's about whether they rise, and by how much.

What this could mean for you

If your fixed rate ends in the next six months, it may be worth looking at your options before Thursday. Many lenders let you secure a new deal several months before your current one ends, and in many cases you can still switch if rates improve before it starts.

If you're buying, a mortgage agreement in principle can help you understand your budget while rates are moving.

If you're on a tracker or variable rate, your payments would rise if Bank Rate goes up. It's worth checking how a 0.25% or 0.5% increase would affect your monthly budget.

Quick Mortgages offers independent, whole-of-market advice with no broker fees. We can help you compare your options before rates move.

Speak to an adviser

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