BoE raises Bank Rate to 4%

November 05, 2026 (MLN): The Bank of England (BoE) has raised its Bank Rate by 0.25 percentage points to 4%, its first increase in more than three years, as it seeks to curb rising prices driven by higher petrol and diesel costs.

The decision, which was widely expected, was taken by a majority of 8-1 at the Monetary Policy Committee (MPC) meeting, while one member voted for a larger 0.5 percentage point hike to 4.25%, according to a press release by the Bank.

The central bank said the conflict in the Middle East, now in its ninth month, has pushed global energy prices higher from an already elevated level.

UK consumer price index (CPI) inflation rose to 3.5% in September and is expected to climb to around 5% by the middle of next year, before easing as the impact of higher energy prices on 12-month inflation rates fades and still restrictive monetary policy weighs on inflation.

The MPC said the direct effects of costlier energy are clear and will keep feeding into business and household energy bills, while evidence of knock-on effects on other prices and wages remains limited.

However, it said the degree of inflationary pressure in the pipeline is now enough to justify a rate increase. Activity data in recent months have generally come in stronger than expected, adding to the case for modestly tighter policy.

The committee stressed that monetary policy is not on a pre-set path and that it will assess the evidence at each meeting, in particular how likely high energy prices are to spill over into other prices and the wider economy, by tracking underlying pay, pricing behaviour and slack.

It said it will adjust Bank Rate as needed to bring CPI inflation back to the 2% target in the medium term.

Copyright Mettis Link News