Bank of England Raises Interest Rates to 4% in First Hike Since 2023
The Bank of England raises interest rates to 4% on Thursday 5 November 2026, the first increase in borrowing costs since August 2023. The Monetary Policy Committee voted 8-1 for the quarter-point rise, with one member backing a bigger half-point move, as the Bank warned inflation could reach around 5% by the middle of next year.
The decision was announced at 12:00 GMT, with Governor Andrew Bailey holding a press conference at 12:30 GMT. It ends a run of six consecutive meetings at which the Bank held rates steady, and it comes as households already face higher energy bills and mortgage costs.
| Item | Detail |
|---|---|
| Decision | Bank Rate raised 0.25 percentage points to 4% |
| Announced | Thursday 5 November 2026, 12:00 GMT |
| MPC vote | 8-1 in favour of the rise |
| Dissenter | Catherine Mann voted for a 0.5-point rise to 4.25% |
| Previous rate | 3.75% |
| Last increase | August 2023 |
| September CPI inflation | 3.5% in the year to September, up from 3.1% in August |
| Inflation forecast | Around 5% by the middle of next year |
| Bank of England target | 2% |
| Growth forecast | 1.6% this year and 1.3% next year, revised up |
An 8-1 Vote — and One Call for a Bigger Rise
The Monetary Policy Committee voted by a majority of 8-1 to increase Bank Rate by 0.25 percentage points to 4% at its meeting ending on 4 November 2026. The dissent did not come from a member who wanted rates held steady, as a Reuters poll had expected, but from external member Catherine Mann, who voted for a half-point increase to 4.25%.
Mann had said last month that the Bank had been slow to reassure markets that it had a grip on inflation. In the minutes of November’s decision, she said she was concerned about “non-linear inflation risks” now that consumer price inflation had risen to 3.5% in September.
The Reuters poll before the decision had expected a 7-2 vote in favour of a rise, with external members Alan Taylor and Swati Dhingra seen as the most likely to vote to keep rates steady. The actual split showed the committee more united behind action than forecasters had assumed, with the only disagreement over how far and how fast to move.
Why Rising Energy Prices Forced the Bank’s Hand
Pressure on the 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, now in its ninth month, has helped push prices higher, with a surge in petrol and diesel prices a major driving force. 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.
Governor Andrew Bailey said: “There is now enough inflationary pressure in the pipeline caused by the rise in energy prices that an increase in Bank Rate is warranted.” The Bank said it had raised Bank Rate to reduce how much growing energy costs affect other prices. Alpesh Paleja, deputy chief economist at the CBI, said the committee had raised rates for the first time in over three years as its patience with the global energy shock finally ran out.
What a 4% Bank Rate Means for Mortgages 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 had already been moving even before Thursday’s announcement.
According to UK Finance calculations reported by the BBC, around 510,000 homeowners with tracker mortgages could see monthly repayments increase by about £31 following a 0.25 percentage point rise. Reports on 1 November said mortgage rates had already shot back up to three-year highs as markets priced in higher energy costs, and the Bank’s own minutes noted benchmark two-year mortgage rates had risen by nearly 50 basis points since the beginning of September.
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 also revised up its growth expectations to 1.6% this year and 1.3% next year, while unemployment stood at 4.7% in the three months to August.
What Happens Next — and the Warning on Iran
The Bank warned that at least one more increase was likely if the US-Iran conflict continues, as it started on a path its main peers have already embarked on. The US Federal Reserve and the European Central Bank have moved first this time, a contrast with the last energy surge, when the Bank was among the first major central banks to raise rates.
The Bank’s latest Market Participants Survey showed the median expected path for Bank Rate had increased since September, reaching 4% in November and 4.25% in February. Chief economist Huw Pill said raising Bank Rate by 25 basis points “represents a significant step towards attaining the monetary policy stance needed to address current threats to price stability, including those stemming from uncertainty surrounding events in the Middle East.”
The Bank stressed that monetary policy is not on a pre-set path. It said it would continue to assess the evidence at each meeting, in particular how likely high energy prices are to feed through to other prices, and would adjust Bank Rate as necessary to ensure inflation returns to the 2% target in the medium term. Inflation is expected to reach around 5% by the middle of next year, then fall as the impact of rising energy prices fades and restrictive policy bears down.
Frequently asked questions about the Bank of England rate rise
When did the Bank of England raise interest rates to 4%? On Thursday 5 November 2026, announced at 12:00 GMT, after the Monetary Policy Committee’s meeting ending on 4 November 2026.
What was the vote? The committee voted 8-1 to raise Bank Rate by 0.25 percentage points to 4%. Catherine Mann dissented, voting for a half-point rise to 4.25%.
Why did the Bank raise rates 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 linked to the conflict in the Middle East.
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, and UK Finance figures reported by the BBC suggest around 510,000 tracker holders could pay about £31 more a month.
Will there be another rise? That is not publicly verified as a set path. Reuters reported at least one more increase was likely if the US-Iran conflict continues, and the Bank’s survey showed a median expected path of 4.25% by February, but the Bank said policy is not on a pre-set path.
How high could inflation go? The Bank expects inflation to rise to around 5% by the middle of next year, then fall as the energy-price impact fades and restrictive monetary policy takes effect.
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.
