The Bank of England‘s Monetary Policy Committee has held the Bank Rate at 3.75% at its September meeting. This is the sixth consecutive hold since the December 2025 cut. It continues the pattern of patience the MPC has taken through 2026.
The decision matches the majority of market and economist expectations going into the meeting. It comes against a background of rising inflation. UK CPI reached 3.1% in August 2026, up from 2.9% in July, per the Office for National Statistics. This is the highest reading in five months.
The MPC voted 6-3 to hold at 3.75%. Megan Greene, Catherine Mann and Huw Pill voted for an immediate rise to 4.00%, the same three dissenters as in July. The vote split is unchanged from 30 July, but the accompanying minutes carry a more hawkish tone, with the Committee stating it is not appropriate to wait too long for evidence of second-round inflation effects before responding.
Governor Andrew Bailey said today’s decision continues the position he set out at the July press conference:
“Today, we’ve held Bank Rate at 3.75%. Inflation has fallen faster than we’d expected, but the conflict in the Middle East continues to mean high and volatile energy prices. That will cause inflation to rise again later this year. However the conflict unfolds, our job is to make sure any increase in inflation is temporary and that it comes back to our 2% target.”
Speaking to MPs on 8 September, Bailey also pushed back against the idea that a rate rise is inevitable, telling the Treasury Select Committee that the Bank has no “secret plan” to raise rates.
What the MPC’s Decision Signals
The Bank of England has held rates for three connected reasons. All three come directly from the MPC’s stated position.
Middle East conflict is driving energy prices
The Bank has emphasised that conflict in the Middle East has disrupted the transportation and supply of energy, raising fuel prices and pushing up household utility bills and business energy costs. The MPC has been consistent that global energy prices are outside its policy control.
Higher borrowing costs are containing spending
The Bank has noted that mortgage rates for households and borrowing costs for firms are higher than before the conflict, making people more cautious about spending. This weaker demand is one reason the MPC has held rather than raised.
Inflation is expected to rise later this year
The MPC has stated it still expects inflation to go up because of higher energy prices and their knock-on effects. Higher bills could force businesses to raise their prices to cover the cost. This is not a scenario the MPC has to react to yet, but it is the scenario the MPC is watching.
The Bank of England’s central projection has CPI peaking around 3.2% in Q4 2026 before falling back towards the 2% target through 2027. Today’s hold reflects the MPC’s judgement that this peak is broadly on track and that current rates are at about the right level to return inflation to target.
The vote split matters as much as the headline decision. The 6-3 split matches July exactly. But the September minutes read more hawkish than July’s minutes, and the Committee’s language on “second-round effects” signals that November is where the case for a rise gets genuinely tested. November is a forecast-round meeting, published alongside the quarterly Monetary Policy Report, so any policy shift is more likely there than in December.
Markets have the first rise fully priced by year-end. SONIA futures suggest Bank Rate reaches these levels:
- 4.00% by November 2026
- 4.30% by March 2027
- 4.60% by September 2027
For UK SMEs weighing commercial finance decisions, the practical read is straightforward. Rates are stable today. They may not be stable through 2027. Borrowers considering variable-rate facilities should model higher scenarios. Borrowers considering fixed-rate facilities may want to lock in current terms before the market reprices.
What This Means for UK SMEs by Product
Variable-Rate Business Loans
Variable-rate business loans are priced off a lender margin above Bank Rate or another reference rate. Today’s hold means monthly repayments on these facilities stay unchanged for now.
If the MPC raises rates by 25 basis points before year-end (as markets currently price), a variable-rate facility of £250,000 over five years would see monthly repayments rise by approximately £30 to £35 per month. On a £1 million facility, the rise would be closer to £125 per month.
The larger risk is not the first rise but the trajectory. If Bank Rate reaches 4.60% by September 2027 (as SONIA futures suggest), a £250,000 variable-rate facility would see monthly repayments rise by approximately £100 per month against today’s baseline.
Practical action: Model your affordability under a Bank Rate of 4.30% and 4.60% before signing any new variable-rate facility. Stress-test existing facilities against the same scenarios. Our Secured vs Unsecured Business Loans guide covers when each structure fits.
Fixed-Rate Business Loans
Fixed-rate business loans are usually priced off swap rates. Swap rates move on rate expectations rather than on decisions. This is why fixed-rate pricing often moves before an MPC decision rather than after it.
Fixed-rate borrowers currently benefit from swap rates that reflect the “hold with rising probability of rise” market view. If the MPC signals a firmer hawkish direction in tomorrow’s minutes, swap rates may reprice upward, pushing fixed-rate business loan pricing up within days.
Practical action: If you have a business loan facility offer with a fixed rate and a time-limited acceptance window, the case for signing before month-end is stronger than it was going into today’s decision. Our Business Loan Interest Rates UK guide covers indicative UK rate ranges across product types.
Invoice Finance
Invoice finance discount rates are usually quoted as a margin over the Bank of England base rate. The margin generally sits around Bank Rate plus 1.5% to 3.5%. Today’s hold means discount charges on drawn funds stay at their current level.
A rate rise before year-end would flow through to invoice finance discount charges quickly. These are calculated daily against the drawn balance. On a £500,000 facility with an average draw of £350,000, a 25 basis point Bank Rate rise would add approximately £900 per year in discount charges.
Our invoice factoring vs invoice discounting guide covers how discount rates apply across the two main invoice finance structures. Our Invoice Finance Fees Explained guide covers the full fee taxonomy.
Practical action: Ask your invoice finance provider whether your discount rate is a fixed margin over Bank Rate or a variable margin. Fixed-margin agreements pass through rate changes directly. Variable-margin agreements can move against you independently of Bank Rate.
Asset Finance
Asset finance is usually offered at a fixed rate for the term of the facility. Today’s hold does not affect existing asset finance agreements.
For new asset finance, the position is similar to fixed-rate business loans. Pricing is set off market rate expectations. If those expectations firm up after today’s meeting, pricing on new asset finance agreements may move upward.
Practical action: If you have a planned equipment or vehicle purchase and an asset finance offer on the table, the case for accepting current terms before month-end has strengthened. Our Hire Purchase vs Lease guide covers the two main asset finance structures.
Bridging Finance
Bridging loans are quoted at monthly rates rather than annual rates. Rates generally range from 0.5% to 1.5% per month. The rate depends on LTV, security and borrower profile.
Bridging rates are influenced by the Bank Rate but also by the wider lender risk appetite in the bridging market. Today’s hold keeps the current bridging market rate environment stable.
Practical action: For bridging finance, the more sensitive input is the strength of your exit strategy rather than the Bank Rate outlook. Focus on getting your exit route documented and credible before the monthly cost becomes the primary concern.
The Growth Guarantee Scheme
The Growth Guarantee Scheme supports UK SME borrowing with a 70% government guarantee to the Accredited Lender. GGS interest rates are capped at 14.99% to 21.99% Max AER depending on the Accredited Lender.
Today’s Bank of England hold does not change the GGS Max AER cap. Variable-rate GGS facilities priced with a Bank Rate reference would see their pricing move in line with any future MPC decisions, subject to the Max AER cap.
Following the 12 July 2026 Chancellor announcement, the scheme was substantially expanded:
- £6.5 billion capacity increase
- Turnover cap rising from £45 million to £54 million
- Term extension to 10 years for term loans and asset finance facilities
- Scheme running until 31 March 2030
We are a commercial finance broker, not an Accredited GGS Lender. Where clients are considering finance with Scheme support, we submit applications to Accredited Lenders, who decide whether Scheme support applies.
Practical action: If your business is considering a variable-rate facility with Scheme support, confirm the rate structure with the Accredited Lender. Ask how the rate responds to Bank Rate changes.
What UK SMEs Should Do Now
The 17 September hold gives UK SMEs a moment of stability to plan around. Whether that stability lasts through November depends on the next inflation reading, the trajectory of energy prices, and how the MPC’s more hawkish minutes translate into the November forecast round.
Seven practical steps to take in the next two weeks:
- Stress-test existing variable-rate facilities: Model your affordability under Bank Rate of 4.30% and 4.60%. Identify any facilities where a rise would push repayments above your comfort threshold.
- Review any live finance offers: If you have a fixed-rate offer with a time-limited acceptance window, weigh the acceptance decision against the possibility that swap rates reprice upward in the coming weeks.
- Check your discount margin structure: For invoice finance, asset-based lending and revolving credit facilities, confirm whether your margin is fixed or variable. Ask how Bank Rate changes flow through.
- Compare offers before applying: Use our Compare My Funding tool to see which lenders on our panel may be a fit for your business. The tool uses a soft credit check that will not affect your credit file, and returns indicative offers in minutes rather than after multiple full applications.
- Update your cash flow forecast: Model your working capital position under a Bank Rate rising to 4.00% by year-end and 4.30% by Q1 2027. Identify the months where the working capital pressure peaks.
- Review your GGS eligibility: If your business fits the current scheme criteria and has a viable growth plan, the July 2026 expansion has substantially widened access.
- Talk to a broker before applying: Multiple lender applications in a short period leave hard credit searches on your file. A broker can use a soft credit check to identify suitable lenders before you submit any formal application.
GGS facility sizes sit at:
- £25,001 to £2 million for term loans and revolving credit facilities
- £1,000 to £2 million for asset finance and invoice finance
The Bottom Line
The Bank of England has held Bank Rate at 3.75% at the September MPC meeting. The 6-3 vote matches July exactly, but the accompanying minutes carry a more hawkish tone that shifts attention to the November forecast round.
The Bank has been clear about what today’s decision reflects: current rates are at about the right level to return inflation to target, energy price pressure from the Middle East conflict is outside monetary policy control, and the aim is to prevent inflation from persisting rather than to react to its short-term rise.
For UK SMEs, the practical read is that rates are stable today but may not be stable through 2027. Markets have a rate rise fully priced by year-end. Variable-rate borrowers should model higher scenarios. Fixed-rate borrowers may want to consider locking in before swap rates reprice.
The next MPC decision is scheduled for Thursday 5 November 2026, alongside the quarterly Monetary Policy Report. The following meeting after that is Thursday 17 December 2026.
Use our Compare My Funding tool to see which lenders on our panel may be a fit for your business. The tool uses a soft credit check that will not affect your credit file. If you’d prefer to talk it through first, you can get in touch with Funding Bay to discuss your funding requirements.
When Finance Is Not the Answer
Further borrowing is unsuitable if the company cannot support repayments or already struggles to meet liabilities. It is also unsuitable during relevant insolvency proceedings.
Directors should seek independent support where financial distress affects the company. Sources include:
- Business Debtline
- The Insolvency Service
- An SRA-regulated solicitor
- An accountant regulated by ICAEW, ACCA or the Chartered Institute of Taxation
This article does not provide legal, tax, insolvency or debt advice.
