From MoneyWeek · · 3m
Bank of England Raises Interest Rates to 4%
Bank of England hikes interest rates to 4% amid rising inflation and Middle East conflict.
In brief
Bank of England hikes interest rates to 4% amid rising inflation and Middle East conflict. Bank of England raised interest rates to 4% on 5 November 2026 to combat rising inflation driven by Middle East conflict and energy prices. Originally reported by MoneyWeek.
Bank of England decision
The Bank of England's Monetary Policy Committee confirmed its latest base rate decision today (5 November) to raise rates to 4%.
Rate increase details
Economists believed the MPC would raise the base rate by 0.25 percentage points from 3.75% to 4%.
Inflation rise
Inflation rose to 3.5% in the year to September, up from 3.1% in August.
Next rate decision
The Bank of England's MPC will next meet in December, with an interest rate decision confirmed on 17 December.
Mortgage impact
For someone with a £250,000 tracker mortgage on a 25-year term, a 0.25 percentage point increase adds around £37 a month to repayments.
Deutsche Bank view
Deutsche Bank's chief UK economist says today's hike is not the start of a long hiking cycle.
First hike since 2023
The hike to interest rates today is the first the MPC has made in three years. The last time it raised rates was in August 2023 from 5% to 5.25%.
Food price inflation
Food price inflation has slowed in 2026 due to less upward pressure on labour costs and increases in food packaging costs fading.
Cris Sholto Heaton
Cris Sholto Heaton says rates have been consistently held too low, encouraging excessive dependence on credit growth and persistent asset price bubbles.
Mortgage rates impact
Mortgage rates have hit record highs as lenders price in higher interest rates.
Savers impact
The base rate hike should mean interest rates offered on savings accounts go up, although it could take some time for higher rates to feed through.
Investors impact
Higher interest rates are a headwind for businesses that face higher borrowing costs, and potentially restricted demand.
Inflation forecast
The Monetary Policy Committee forecasts CPI inflation to rise to 5% by midway through 2027.
Andrew Bailey's view
Andrew Bailey says today's increase was warranted with enough inflationary pressure in the pipeline caused by rising energy prices.
MPC vote
Members of the MPC voted by eight to one to raise interest rates to 4%.
Public opinion
More than 400 people voted on the MPC's decision, with 31% saying rates should be held at 3.75% and 30% believing now is the right time to raise rates.
The big picture
Bank of England raised interest rates to 4% on 5 November 2026 to combat rising inflation driven by Middle East conflict and energy prices.
