Bank of England Preview: On the ball?

We expect the Bank of England’s MPC to keep Bank Rate unchanged at 3.75% on 17 September in another 6-3 vote. Higher energy prices have revived upside risks and, if sustained, will further increase market pressure on the MPC to demonstrate it's on the ball. However, tighter financial conditions already provide insurance against absent second-round effects. We also expect the MPC to reduce its annual QT envelope from £70bn to £50bn while continuing to limit long-end gilt sales. Fiscal restraint in the Autumn Budget should make it easier for the MPC to remain on hold.