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Interest rates and monetary policy: Economic indicators

Economic indicators are quick-read summaries of the latest data focusing on different aspects of the UK economy. The full suite of indicators can be found on the main Economic Indicators page.

Major central banks around the world tightened monetary policy in response to rising inflation, initially caused by higher goods and energy prices, as well as bottlenecks in global supply chains. Since around 2023, rates have been cut.

UK (Bank of England)

On 17 September, the Bank of England’s Monetary Policy Committee (MPC) announced it had left interest rates unchanged at 3.75%. The MPC vote was six members voting in favour of no change and three in favour of raising rates by 0.25 of a percentage point.

Rates were gradually cut, by 1.5 percentage points in total, from August 2024 to December 2025.

CPI inflation was 3.1% in August 2026, above the MPC’s target of 2%. Prior to the conflict in the Middle East, the Bank expected that it would fall to around 2% from April 2026 and stay close to 2% for the rest of 2026. On 17 September, the MPC said inflation is expected to rise in coming quarters, reaching “slightly above 4% in 2027 Q1”.

The results of the next scheduled MPC meeting will be announced on 5 November.

Source: Bank of England, Interest rates and Bank Rate [accessed 17 Sep 2026]

The MPC is reducing the size of its asset purchase – or quantitative easing, QE – programme from its peak value of £895bn to £489bn on 9 September 2026. It is doing this by letting some of the government bonds it holds mature and by actively selling some of the bonds it holds - this is called quantiative tightening (QT). At its September 2026 meeting, the MPC laid out a new approach to QT, with an annual average reduction in the assets it holds of £46 billion up to the end of 2034. This involves letting bonds due before 2035 reach maturity, alongside £20 billion per year in active sales of bonds maturing between 2035 and 2049 to the UK Debt Management Office (rather than the Bank selling the bonds directly to the market, as it previously has done). 

QE consisted of the Bank creating new money electronically (as central bank reserves) and then using it to purchase financial assets, mostly government bonds. QT involves the Bank reducing the amount of the assets it had accumulated during QE.

In March 2020 the Bank introduced measures in response to Covid-19. Interest rates were cut to 0.1% - the lowest they have ever been. They remained at this level until December 2021. The MPC also expanded its quantitative easing (QE) programme by £450bn in 2020 and 2021, taking the total value of assets it owned to a peak of £895bn. For more, see section 4.2 of the Library briefing paper, Coronavirus: Economic impact.

United States (Federal Reserve)

Interest rates were raised by 0.25 of a percentage point to a range of 3.75% to 4.00% by the Fed at its policy meeting ending 16 September, citing “elevated” inflation, which Fed Chairman Kevin Warsh said was “too high”. This is the first rate change in 2026 (the Fed cut rates three times at the end of 2025).

The Fed ended its quantitative tightening (QT) policy on 1 December 2025, which had reduced the amount of financial assets - like government bonds and mortgage-backed securities - that it owned. From 1 December it is reinvesting the proceeds from assets that mature. 

The Fed's next scheduled policy meeting ends on 28 October.

Responding to the Covid-19 pandemic, the Fed had by 15 March 2020 cut interest rates to close to 0% from 1.5%‑1.75% prior to the pandemic. On 23 March 2020, the Fed announced a wide range of measures designed to support the economy. This included buying debt from the government, corporations and purchasing other securities (such as those backed by mortgages and other assets). The Fed began to raise rates again in March 2022, taking them from 0-0.25% to a peak of 5.25-5.50% in July 2023. 

Eurozone (European Central Bank)

At its 10 September 2026 meeting the ECB raised its main interest rates by 0.25 of a percentage point, with the deposit rate increased from 2.25% to 2.5%. The ECB said that inflationary pressures arising from the conflict in the Middle East would contribute to inflation remaining above its 2% target for an extended period. The ECB previously raised interest rates in June 2026, also by 0.25 of a percentage point. 

The ECB is unwinding its two main quantitative easing programmes, including its pandemic-related QE programme.

The ECB's next scheduled policy meeting ends on 29 October.

The ECB launched its pandemic response on 12 March 2020 and expanded it significantly on 18 March and 4 June. The ECB has also made cheap loans available to banks to encourage them to lend to businesses.

In July 2022, the ECB announced the creation of a new bond purchase programme, the Transmission Protection Instrument (TPI). The TPI is designed to be used, if needed, to lower government borrowing costs in individual countries, if these costs are rising due to “unwarranted, disorderly market dynamics”. 

Next updates

This page is updated following monetary policy meetings. The next scheduled meetings are:

• UK (5 Nov)
• US (28 Oct)
• ECB (29 Oct)