Why the bank of england might not be as hawkish as you think
中文标题
为何英国央行可能不如你所想的那样偏鹰派
Core conclusion · Tlines extraction
ING expects the Bank of England to keep Bank Rate on hold at 3.75% at its 17 September 2026 meeting with another 6-3 vote. While the gas and oil price surge means inflation could peak at or above 4% this winter — putting the UK in the Bank's adverse energy scenario that its models say could warrant up to four hikes — ING argues the case for tightening is not compelling: energy-intensive inflation has fallen, food inflation dropped from 3.6% in January to 1.3% in July, private sector wage growth is around 3%, and rate-sensitive sectors like construction are weak. ING's base case is no moves until 2027, when it expects cuts in April and November, plus a slowdown in quantitative tightening to a £50bn envelope from £70bn.
- Institution
- ING THINK
- Published
- 09/11/2026
- Research topic
- Inflation · Crude Oil (WTI)
- Time horizon
- short-term · medium-term · 2027
Key arguments
- We expect the Bank of England to keep rates on hold at 3.75% on 17 September, with another 6-3 vote, and do not expect the committee to turn materially more hawkish, in sharp contrast to the ECB this month.
- The rise in energy prices means inflation could peak at or above 4% this winter, the level the Bank has said raises the statistical risk of second-round effects, but the Bank focuses on the duration of elevated prices, and volatility argues against extrapolating the current backdrop.
- There is very little sign that the energy shock is broadening into the wider inflation basket: energy-intensive goods and services inflation has fallen this year, food inflation fell from 3.6% in January to 1.3% in July and could hit zero short term, and private sector wage growth at a little over 3% is consistent with the 2% target.
- Unlike the US or the eurozone, it is hard to argue UK rates are not restrictive, given a fragile jobs market and weak rate-sensitive sectors like construction, plus material fiscal tightening as tax as a share of GDP rises by half a percentage point.
- A November hike is possible but not inevitable, and there is a tail risk that Governor Bailey pushes back against market pricing of four rate hikes in the coming year, having said in April that markets were getting ahead of themselves when just two hikes were priced.
- ING expects the Bank to slow quantitative tightening to a £50bn envelope for the next 12 months from £70bn (circa £50bn redemptions and £20bn active sales), with redemptions set to fall to £28bn and active sales kept broadly stable.
- External factors dominate gilt markets: a $10 rise in oil lifts gilt yields by 10-15bp, and high US real rates add upward pressure; EUR/GBP is in a 0.85-0.86 equilibrium with three-month realised volatility the lowest in twenty years.
Key numbers
- Bank Rate expected on hold
- 3.75%
- Expected MPC vote
- 6-3
- Possible winter inflation peak
- at or above 4%
- Food inflation
- 3.6% in January, 1.3% in July
- Private sector wage growth
- a little over 3%
- Quantitative tightening envelope
- £50bn over the next 12 months (from £70bn)
- Gilt yield sensitivity to oil
- 10-15bp per $10 rise in oil
- EUR/GBP forecast
- 0.86 end-September, 0.87 year-end
Main risks
- Energy prices stay consistently high into the November meeting, validating the Bank's adverse scenario and making a November rate hike more likely.
- Second-round inflation effects are slow to appear and could still materialise, given models suggest peak pass-through to energy-intensive categories takes 12-18 months.
- A stronger-than-expected US real rate rise or bond supply concerns push gilt yields and UK interest rates higher, keeping gilt market volatility elevated.
- Gilt yields rise sharply (about 10-15bp per $10 oil increase) and, together with high US real rates, tighten UK financial conditions more than expected.
- EUR/GBP breaks higher if Governor Bailey pushes back against the 100bp of tightening priced by markets, with a move above 0.86-0.87 possible.
- Volatility in FX and rates could rise from financial-sector sources or from the new government struggling to balance higher social spending and fiscal restraint.
- Wage growth, though currently consistent with 2% inflation, could change; the committee is deeply divided with three members already voting for a hike.
Corresponding source evidence
We expect a 6-3 decision to keep rates on hold Governor of the Bank of England, Andrew Bailey.
We're expecting a 6-3 decision to keep rates on hold at next Thursday's meeting Our Bank of England view in a nutshell We expect the Bank of England to keep rates on hold at 3.75% with another 6-3 vote at its 17 September meeting.
Unlike the ECB, we expect the Bank's doves to hold their ground and reiterate that the risk of second-round effects on inflation remains low.
Context: the conclusion is Tlines' automated extraction, not the institution's wording. Quoted evidence is publisher wording. Scope and date must travel with the conclusion.
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AI analysis
Cross-institution comparison · CPI
How this page was produced
Tlines extracted the conclusion, arguments, numbers and risks above from the report published by ING THINK on 09/11/2026, then structured them for comparison. The publisher's own wording is reachable through the source link on this page and is displayed in full above. Last updated 10/17/2026. Methodology · Source policy · AI usage · Request a correction