Bank of England raises interest rates to 4%, the first increase for more than three years
News Source
β’Thu, 05 Nov 2026 18:00:28 GMT
π° What Happened
The Bank of England has raised interest rates to 4 percent from 3.75 percent. It is the first increase in more than three years. Eight of the nine members of its rate-setting committee voted for the quarter-point rise, and one wanted a bigger half-point move.
Governor Andrew Bailey said the rise should not be seen as the start of a long series of hikes. But he warned it may not be the last unless the conflict in the Middle East ends.
π The Backstory
The Iran war has kept oil prices above 100 dollars a barrel for months, as hopes faded of reopening the Strait of Hormuz. UK inflation reached 3.5 percent in September, well above the bank's 2 percent target.
The bank now expects inflation to peak at about 5 percent in the middle of next year. Higher rates raise mortgage and loan payments, which is painful during a cost of living crisis. Its next decision is on 17 December.
π― Why It Matters
A rate rise means higher mortgage and card payments for households already squeezed by energy and food bills.
The Bank of England has raised interest rates to 4 percent from 3.75 percent. It is the first increase in more than three years. Eight of the nine members of its rate-setting committee voted for the quarter-point rise, and one wanted a bigger half-point move.
Governor Andrew Bailey said the rise should not be seen as the start of a long series of hikes. But he warned it may not be the last unless the conflict in the Middle East ends.
The Iran war has kept oil prices above 100 dollars a barrel for months, as hopes faded of reopening the Strait of Hormuz. UK inflation reached 3.5 percent in September, well above the bank's 2 percent target.
The bank now expects inflation to peak at about 5 percent in the middle of next year. Higher rates raise mortgage and loan payments, which is painful during a cost of living crisis. Its next decision is on 17 December.
A rate rise means higher mortgage and card payments for households already squeezed by energy and food bills.