EconomyBrief
Bank of England raises rate to 4% as inflation pressure persists
Policymakers voted 8–1 for a quarter-point increase as Bank staff forecast higher inflation; one member sought a larger rise and all nine favored an increase.
The numbers
- Bank Rate after the increase
- 4 %
- Bank Rate before the increase
- 3.75 %
- UK consumer price inflation
- 3.5 %
- Conditional Bank staff CPI inflation forecast
- around 5 %
The Bank of England raised Bank Rate from 3.75% to 4% on November 5, 2026, as policymakers weighed inflation pressure associated with energy costs.
Higher interest rates shape borrowing conditions for households and businesses. The Bank’s minutes said elevated forward rates had already fed through to rates faced by some of them.
The Monetary Policy Committee voted 8–1 for the quarter-percentage-point increase at its meeting ending November 4, according to the Bank’s minutes. Catherine L Mann preferred a half-point increase to 4.25%, so all nine members favored a rise, while differing on its size. The Associated Press reported through ABC News that the increase was the Bank’s first since August 2023.
The Bank cited UK consumer price inflation of 3.5% in September 2026. Its staff projected inflation of around 5% in the second quarter of 2027, using energy-price assumptions averaged over 15 UK working days through October 27.
The committee said it would decide policy meeting by meeting, without a predetermined rate path. AP reported on November 5 that the Bank and its governor saw sustained declines in energy prices as a factor that could reduce the need for further increases. That outlook and the earlier assumption window used for the forecast cover different periods.
What we don't know yet
- How will the committee set Bank Rate at later meetings?
- How will this particular decision affect individual borrowers and firms?
Timeline
The Monetary Policy Committee meeting ended.
The Bank announced the Bank Rate decision.