US rates just went up. UK rates didn’t. Here’s what that means for your money.

Two central banks, one week, two different answers to the same question. On 16 September, the US Federal Reserve raised its benchmark interest rate by a quarter point, to a range of 3.75% to 4%. It was the first US rate rise in more than three years, and the first under new Fed Chair Kevin Warsh. The vote was unanimous.

A day later, the Bank of England looked at broadly the same problem and reached a different conclusion. The Monetary Policy Committee voted 6–3 to hold Bank Rate at 3.75%. Three members wanted a rise to 4%. The Bank didn’t move.

Two central banks, facing the same global backdrop, landed in different places. That split is more useful to understand than either decision on its own.

Why did the Fed raise rates and the Bank of England didn’t?

Both decisions were shaped by the same underlying pressure: inflation that refuses to fall back to target, driven largely by energy prices tied to the conflict in the Middle East. Oil has stayed high and volatile, and that’s fed through into both economies’ price data.

The difference is how each central bank chose to respond to that pressure at this particular meeting. The Fed’s committee judged that a resilient labour market gave it room to act now, and voted unanimously to do so. The Bank of England, facing UK CPI inflation of 3.1% in August against a 2% target, split three ways — a majority preferred to wait for more evidence, while three members thought the case for a rise was already made.

Governor Andrew Bailey was explicit that the Bank sees a rise becoming more likely the longer energy price volatility continues. In other words: this isn’t the Bank ruling out a rise. It’s the Bank not yet convinced this was the meeting for it.

What does this mean for mortgages and savings in the UK?

For anyone with a mortgage or savings account, the immediate practical answer is: nothing changes yet. Bank Rate is unchanged, so tracker mortgages and variable savings rates haven’t moved as a direct result of this decision.

What has changed is the balance of expectation. Three MPC members voting for a rise, in a climate where the Fed has just hiked and the ECB has raised rates twice since June, shifts the conversation. If you’re on a fixed-rate mortgage due for renewal in the next six to twelve months, or holding cash savings and wondering whether to lock in a rate now versus wait, that shift in tone is worth factoring in — even though nothing has moved on paper yet.

What does this mean for investment portfolios?

Markets don’t just react to what a central bank does. They react to what a central bank signals about what it’ll do next. A rate rise that was already priced in by markets — as the Fed’s was — tends to cause less disruption than a surprise. A split vote at the Bank of England, on the other hand, adds uncertainty rather than resolving it.

For a diversified portfolio, none of this calls for a reaction on its own. It’s a reminder that UK and US monetary policy, which have moved roughly in step for years, may now be diverging — and that divergence, more than either single decision, is the thing worth watching over the coming months.

FAQ

Did UK interest rates go up this week?

No. The Bank of England held Bank Rate at 3.75% on 17 September 2026. It was the US Federal Reserve, not the Bank of England, that raised rates — by a quarter point, to a range of 3.75% to 4%, on 16 September.

Why did the Fed raise rates when the Bank of England didn’t?

Both central banks are dealing with inflation pushed up by high, volatile energy prices linked to conflict in the Middle East. The Fed’s committee judged the US labour market was strong enough to act now, and voted unanimously for a rise. The Bank of England’s committee was split — six members preferred to wait, three wanted to raise rates immediately — reflecting genuine disagreement about whether UK conditions justify a move yet.

Will the Bank of England raise rates soon?

No one can say for certain, including the Bank itself. Governor Andrew Bailey has said a rise becomes more likely the longer energy price volatility persists, and three of the nine MPC members already voted for one this month. That’s a meaningfully different picture from earlier in the year, but it isn’t a commitment to act at the next meeting.

Does a US rate rise affect UK mortgages directly?

Not directly. UK mortgage rates are set relative to Bank Rate and market expectations for it, not the US federal funds rate. But global rate decisions influence each other’s context — a Fed hike can shift what UK markets expect the Bank of England to do, which in turn affects the rates lenders price into fixed-rate mortgage deals.

Should I change anything with my savings or investments because of this?

That depends entirely on your own circumstances, timeframe and existing plan — not on a single week’s central bank decisions. If you’re weighing a mortgage renewal, a savings rate lock-in, or how your portfolio is positioned for a period where UK and US policy might diverge, that’s a conversation worth having with your adviser against your actual numbers, rather than reacting to headlines.

About the author

Sedulo Wealth is an independent financial planning and wealth management firm, part of Sedulo Group. Sedulo Wealth works with individuals, families and business owners across the UK on accumulating and preserving wealth, combining planning-led advice with the wider tax, accounting and business expertise of the Sedulo Group.