Kevin Warsh, chairman of the US Federal Reserve, and Andrew Bailey, governor of the Bank of England at the Jackson Hole Economic Symposium in Moran, Wyoming, on Aug. 28, 2026.<\/p>\n
David A. Grogan | CNBC<\/p>\n
The Bank of England is widely expected to leave interest rates unchanged on Thursday, despite inflation rising<\/a> well above its 2% target. <\/p>\n Markets are pricing in more than an 80% chance that the central bank will hold interest rates steady on Thursday, according to LSEG data, but a hike of at least 25 basis points is widely anticipated at its next meeting in November. <\/p>\n A hold would mark a divergence from other major central banks. The U.S. Federal Reserve<\/a> announced a quarter-point hike on Wednesday, its first hike since 2023. Last week, the European Central Bank<\/a> announced its second rate hike this year, after raising rates in June<\/a> for the first time in three years. The Bank of Japan is expected<\/a> to raise its key interest rate at the end of its two-day meeting on Friday. <\/p>\n The Bank of England has not altered its key interest rate this year. It last changed rates in December, with a 25-basis-point cut<\/a>. <\/p>\n Data released Wednesday showed that the U.K.’s inflation rate rose to 3.1% in August, marking its first rise above 3% since March. <\/p>\n The country’s Office for National Statistics (ONS) said the spike was largely driven by rising motor fuel costs, which surged 23% year-on-year. <\/p>\n As a net energy importer, the U.K. is particularly vulnerable to external energy shocks, and is still grappling with a cost-of-living crisis brought on by post-Covid inflation and the Russia-Ukraine war’s impact on natural gas supplies. <\/p>\n Global inflation concerns, political instability and apprehension about U.K. fiscal policy have put pressure on British government bonds, known as gilts, this year. Britain has the highest borrowing costs in the G7, with yields on its long-dated 20- and 30-year gilts approaching the 6% mark. <\/p>\n