Bank of England raises rates to 4%, its first hike in more than three years

The Bank of England raised its main interest rate on Thursday, 5 November, for the first time in more than three years, from 3.75% to 4%.

The vote

The Monetary Policy Committee voted 8–1 for a 0.25-point increase. One member, Catherine Mann, preferred a bigger move to 4.25%, according to the Guardian.

Why

• The conflict in the Middle East, now in its ninth month, has pushed up global energy prices, motor fuel costs and household utility bills, the Bank said.
• UK consumer price inflation rose to 3.5% in September. The Bank now expects it to climb to around 5% by mid-2027 before easing.
• The Bank said there was still little evidence of knock-on effects on other prices and wages, but that energy costs had been high long enough for such effects to appear eventually. Stronger-than-expected economic activity added to the case for tightening.

What comes next

Governor Andrew Bailey said the decision “shouldn’t be seen as the first in an inevitable long sequence of hikes”, but added that unless the Middle East conflict is resolved it is unlikely to be the last. The next decision is due on 17 December 2026.

Higher rates raise the cost of mortgages, loans and credit cards, while savers can expect better returns, the BBC noted.