The Bank of England raised its main interest rate by 0.25 percentage points, to 4%, on Thursday, 5 November. This is the first increase since August 2023. The bank justifies it with high energy prices linked to the conflict in the Middle East.
Vote: 8 to 1
The Monetary Policy Committee (MPC) decided by a majority vote of 8–1 to raise Bank Rate from 3.75% to 4%. One member, Catherine Mann, voted for a larger move of 0.5 percentage points, to 4.25%. The bank published the decision on Thursday together with the summary of the meeting, which ended on 4 November, and the Monetary Policy Report.
The bank also announced it on X:
In September, when rates were left unchanged, the vote was 6–3: three members already wanted a hike to 4% at that time.
Energy and inflation
The bank explains that it raised the rate to limit the impact of rising energy prices on other prices in the economy. The MPC summary noted that the conflict in the Middle East is now in its ninth month, and global energy prices kept rising from an already high level. Current CPI inflation is 3.5% (data for September), against a 2% target. According to the bank’s forecasts, inflation is expected to reach around 5% in mid-2027.
The committee stressed that monetary policy 'is not on a predetermined path’ and will be adjusted so that inflation returns to the 2% target over the medium term.
Bailey: next move is not a foregone conclusion
Governor Andrew Bailey said in his comment that there is already enough inflationary pressure in the economy from rising energy prices to justify the hike. He added that further tightening depends on whether price pressure persists and whether price increases spread to wages, pricing and expectations, especially in the 2027 pay round. 'The next move could be up, down or sideways’ – Bailey wrote.
Huw Pill said that a 25 basis point hike is a 'significant step’, but reaching an appropriate level of rates may require further tightening, including in the near term. Catherine Mann called her votes for hikes a 'down payment’ meant to counter second-round effects and strengthen the bank’s credibility.
Next meeting in December
The next MPC decision is scheduled for 17 December. Before the hike, the rate had been 3.75% since December 2025.
