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The Bank of England’s Monetary Policy Committee raised Bank Rate by 0.25 percentage points to 4% on 5 November 2026, voting 8–1. The Bank said UK inflation had reached 3.5% in September and could rise to around 5% by the middle of 2027, while warning that the effects of higher energy costs on other prices and wages remain uncertain.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% on 5 November, as policymakers responded to rising global energy prices and the risk that they could keep UK inflation elevated. The Monetary Policy Committee (MPC) approved the increase by an 8–1 majority at a meeting that ended on 4 November.
The lone dissenting member preferred a larger increase of 0.5 percentage points, to 4.25%. The Bank said UK consumer price inflation was 3.5% in September and was expected to rise to around 5% by the middle of 2027. It projected inflation would then fall as the effect of higher energy prices on annual comparisons faded and restrictive monetary policy weighed on price growth.
The committee said direct effects from rising energy prices were already clear and would continue to affect household and business bills. It also said there was limited evidence so far that higher energy costs had spread to other prices and wages. In its view, however, the inflationary pressure building in the pipeline was sufficient to justify raising the rate. Recent UK activity data had also generally been stronger than expected, adding to the case for a modest increase.
Minutes of the meeting describe overseas conflict and energy prices as the main sources of uncertainty for the inflation outlook. The Bank said its policy could not change global energy prices; instead, it would seek to keep the economic adjustment consistent with returning inflation to its 2% target over the medium term. The MPC said it would assess new evidence at each meeting, including pay, firms’ pricing decisions and the amount of spare capacity in the economy.
How the rate rise affects borrowers
A higher Bank Rate can feed through to borrowing costs, although the timing and size of any change depend on lenders and the type of financial product. People with variable-rate mortgages and other borrowing may see repayments rise if their lender passes on the increase. The decision can also influence savings rates, but the effect on individual accounts is not automatic.
The move signals that the MPC is responding to the risk that an energy-price shock could become a broader, more persistent inflation problem. Raising rates cannot reduce the global price of oil or gas. The policy choice is intended to limit the chance that higher costs become embedded in prices and wages, while the committee also has to weigh the effects of tighter policy on economic activity and household finances.
The Bank’s forecast of inflation reaching around 5% is a projection, not a confirmed future outcome. It depends on energy prices and how businesses and workers respond. The committee said it would monitor whether firms pass costs on to consumers, absorb them through lower margins, or face other changes in demand and costs.
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Energy shock behind the November decision
The Bank’s meeting took place amid a conflict in the Middle East that it said had entered its ninth month. Its minutes reported substantial increases in energy futures since the July Monetary Policy Report. Over the 15 UK working days ending 27 October, the front-month Brent crude oil futures contract averaged $108 a barrel, 38% above its level at the time of the July report. The UK front-month natural gas futures contract averaged 216 pence per therm, up 81% over the same comparison.
The Bank said direct energy effects accounted for about one percentage point of September’s 3.5% inflation rate, most of that contribution coming from fuels. It expected those direct effects to build over the following few quarters and then recede, based on futures prices and the fading effect of earlier price changes in annual inflation calculations.
The minutes also said there had so far been little sign of higher energy costs feeding through to other consumer goods prices, and food inflation had been lower than expected earlier in the year. Some firms were protected temporarily by hedging or fixed-price contracts, while Bank intelligence indicated that some businesses were absorbing higher costs through reduced profit margins. The committee cautioned that these buffers might not last.
How far energy costs will spread
The length and course of the conflict, and the resulting path of global energy prices, remain uncertain. The Bank said a sustained de-escalation could bring prices down, while continued conflict, a wider regional escalation or further damage to refining capacity could keep them higher. It also reported a drawdown in energy supply buffers during 2026 that could amplify price pressure.
It is not yet clear whether the limited indirect effects seen so far reflect firms and households avoiding higher costs, or whether those effects have merely been delayed. The minutes say the eventual impact will depend partly on how long the energy shock lasts, whether firms can absorb costs, and whether stronger demand allows them to rebuild profit margins. The supplied summary and minutes do not specify how individual lenders will adjust mortgage or savings rates, or the precise path of inflation after its projected mid-2027 peak.
December meeting will test new data
The MPC’s next scheduled rate decision is due on 17 December 2026. Until then, the committee has said it will monitor energy prices and their effects on underlying pay, business pricing and spare capacity. Those indicators will help it judge whether inflation pressure is spreading beyond direct energy bills and whether another rate change is warranted.
The November decision does not set a guaranteed course for future rates. The Bank said it would assess evidence at each meeting and adjust policy as needed to meet its medium-term inflation target. The available source material does not give a specific forecast for the December decision.
Key Questions
What is the Bank of England’s new Bank Rate?
Bank Rate is 4%, after the MPC raised it by 0.25 percentage points at its meeting ending 4 November 2026.
How did the committee vote?
The decision passed by 8 votes to 1. One member voted for a larger rise of 0.5 percentage points, which would have taken Bank Rate to 4.25%.
Why did the Bank raise the rate?
The committee cited rising global energy prices, a forecast that inflation could reach around 5% by the middle of 2027, and stronger-than-expected recent activity data. It said the inflationary pressure building in the pipeline warranted an increase, despite limited evidence so far of wider price and wage effects.
When is the next rate decision?
The Bank lists 17 December 2026 as the date of its next scheduled decision. The committee has not committed to a particular rate move at that meeting.
Source: bankofengland.co.uk
