Bank of England Interest Rate November 2026: Why a Rise to 4% Is Expected on Thursday

The Bank of England is expected to raise interest rates on Thursday 5 November 2026, with Bank Rate tipped to rise from 3.75% to 4%. The decision, due at 12:00 GMT with Governor Andrew Bailey holding a press conference at 12:30 GMT, would be the central bank’s first increase in borrowing costs since August 2023. Markets and economists have converged on the same call after inflation came in hotter than the Bank had forecast.

Economists polled by Reuters expect a 7-2 vote in favour of the quarter-point rise. External Monetary Policy Committee members Alan Taylor and Swati Dhingra are seen as the most likely to vote to keep rates steady. That split would still be a clear majority for action, after the committee voted 6-3 to hold rates in September.

Why September inflation forced the Bank’s hand

Pressure on the Monetary Policy Committee has grown since official figures showed Consumer Prices Index inflation rose to 3.5% in September, the highest level in 11 months. That reading was above the Bank’s July forecast of 3.0% for September, and it left inflation well above the 2% target. The conflict in the Middle East has helped push prices higher, with a surge in petrol and diesel prices a major driving force.

In September, the Bank warned that inflation would rise above 4% early next year. It also said the jump in energy prices since its July forecasts bore similarities to an earlier energy shock, when it was criticised for underestimating how persistent inflation would prove. Governor Andrew Bailey has said the Bank cannot wait for conclusive proof of second-round effects, where higher inflation feeds into wage and price setting, or it will act too late.

Energy bills are a central part of that story. The Ofgem price cap rose by 3.6% for a typical household on 1 October, and forecasts point to a further rise of 22% in January. Suren Thiru, chief economist for the Institute of Chartered Accountants in England and Wales, said an interest rate rise to 4% “looks all but certain” and would likely be viewed as a precautionary hike to contain price pressures. Ellie Henderson, an analyst for Investec, said many committee members’ patience with the recent rise in inflation has worn thin.

What a 4% Bank Rate would mean for borrowers and savers

A rise in Bank Rate does not change every mortgage or savings rate automatically, but it shifts the cost of borrowing across the economy. Tracker mortgages typically move with Bank Rate, while fixed-rate deals are priced mainly off market expectations, which is why lenders have already been moving even before Thursday’s announcement. Reports on 1 November said mortgage rates had shot back up to three-year highs as markets priced in higher energy costs.

For savers, higher rates can improve returns on variable-rate accounts, although banks are not obliged to pass on the full rise. For borrowers on variable deals, the direction is less welcome: monthly costs tend to rise when Bank Rate rises. The Bank will also be watching its first assessment of Chancellor John Healey’s Budget, delivered last week, as part of the wider economic picture. As with other UK infrastructure under strain this autumn — Pero’s Bridge in Bristol collapsing into the harbour days before its planned removal showed — households are facing several cost and disruption pressures at once, and Thursday’s decision lands in that same squeeze.

Why the Bank may still push back on market bets for 2027

The more revealing part of Thursday may not be the rise itself, but what Bailey signals about what comes next. Financial markets are pricing three to four more quarter-point hikes in 2027, which would take Bank Rate to between 4.75% and 5.0%. Economists polled by Reuters last month were split on whether further hikes would follow after November’s decision.

Reuters reported that even policymakers seen as more focused on inflation may baulk at endorsing that market pricing. The Bank’s updated forecasts are likely to show a mixed picture: slightly stronger growth this year, overshadowed by weaker growth further out as rising inflation and higher energy costs bite. Unemployment, which fell to 4.7% in the three months to August, the lowest level in more than a year, gives the committee some room to act without an immediate jobs warning flashing red.

This time, the Bank is not leading the world’s central banks into tighter policy. Reuters noted that the US Federal Reserve and the European Central Bank have moved first, a contrast with the last energy surge, when the Bank was among the first major central banks to raise rates. The question for Thursday is therefore narrower: whether one precautionary rise, clearly explained, is enough to stop higher energy prices becoming embedded in wages and prices.

The decision is not yet made, and a hold remains possible if the committee judges that energy-driven inflation will fade on its own. On the evidence published so far, however, the balance of forecasts, market pricing and committee commentary points the same way. Thursday’s announcement, the vote split and Bailey’s press conference will show whether the Bank agrees — and how far it is willing to go next.

Frequently asked questions about the Bank of England rate decision

When will the Bank of England announce its November 2026 rate decision? On Thursday 5 November 2026 at 12:00 GMT, with Governor Andrew Bailey holding a press conference at 12:30 GMT.

What rate rise is expected? Economists polled by Reuters expect Bank Rate to rise from 3.75% to 4.0%, a quarter-point increase and the first rise since August 2023.

Why is a rise expected now? September CPI inflation reached 3.5%, above the Bank’s July forecast of 3.0% and well above its 2% target, driven in large part by energy and fuel prices.

Will my mortgage go up immediately? Not necessarily for fixed-rate borrowers, whose rate is locked for the deal term. Tracker mortgages typically follow Bank Rate, while new fixed deals reflect market expectations that have already moved.

What happens after November? That is not publicly verified as a set path. Markets price three to four more quarter-point hikes in 2027, to 4.75%-5.0%, but economists polled by Reuters were split on whether further hikes will follow.

Myth-busting: A Bank Rate rise is not the same as every mortgage, loan and savings rate rising by the same amount on the same day. Different products follow Bank Rate, market expectations or their own terms, so the effect depends on the type of deal a household holds.