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The Bank of England’s Monetary Policy Committee raised Bank Rate by 0.25 percentage points to 4% at its meeting ending Nov. 4, 2026, with eight members supporting the move and one seeking a larger increase. The Bank said UK inflation reached 3.5% in September and could rise to around 5% by the middle of 2027, while warning that the path depends on energy costs and whether they spread into other prices and wages.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% after a meeting ending Nov. 4, 2026, as the Monetary Policy Committee responded to rising energy costs and inflation risks. The vote was 8–1; one member preferred a larger increase, to 4.25%. The decision affects borrowing costs across the UK and comes as the Bank expects inflation to rise further before easing.
The committee said UK CPI inflation was 3.5% in September and was expected to reach around 5% by the middle of next year. It projected inflation would then fall as the effects of higher energy prices on annual inflation comparisons faded and restrictive monetary policy continued to weigh on price pressures. Those projections depend in part on assumptions about future energy prices.
The Bank’s summary said global energy prices had risen from an already elevated level amid the conflict in the Middle East, then in its ninth month. Higher prices were expected to affect household and business energy bills. The committee said the scale of inflationary pressure building in the economy warranted a rate increase, while recent activity data had generally been stronger than expected.
In the minutes, members noted that direct energy effects accounted for about one percentage point of September’s inflation rate, much of it from fuel. They said there was so far limited evidence that higher energy costs had spread to other consumer prices and wages. Some firms were absorbing costs through lower profit margins, while hedging and fixed-price contracts had delayed higher gas and electricity costs for some businesses.
Higher Rates as Energy Costs Rise
The increase raises the benchmark cost of borrowing and signals the committee’s concern that an energy shock could keep inflation above target if its effects spread beyond fuel and utility bills. Higher Bank Rate can put downward pressure on demand and price growth, but it does not directly lower global oil or gas prices. The Bank said its task was to manage the domestic adjustment so inflation returns sustainably to its 2% target in the medium term.
For households and businesses, the rate decision may feed into the pricing of loans, mortgages and savings products, although the effect and timing depend on individual lenders and contracts. The Bank’s decision does not establish how any particular product will change. The projected rise in inflation also points to continued pressure on living costs, especially if energy prices remain high or contribute to other prices.
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Energy Shock Shapes Inflation Outlook
The committee’s minutes describe the overseas conflict and its effects on energy markets as the main source of uncertainty for the UK inflation outlook. Over the 15 UK working days ending Oct. 27, the front-month Brent crude futures contract averaged $108 a barrel, while UK front-month natural gas futures averaged 216 pence per therm. The Bank said those averages were 38% and 81% above their levels at the time of its July Monetary Policy Report, respectively.
The minutes said a sustained de-escalation could bring energy prices down, while continued conflict, wider regional escalation or additional damage to refining capacity could keep prices higher. Committee members also discussed whether indirect inflation effects were diminished or merely delayed. Their concern was that firms might eventually pass higher costs on to customers, particularly if demand strengthened and companies sought to rebuild margins.
Pass-Through to Prices Remains Unclear
The Bank said it had seen limited evidence so far that higher energy prices were affecting other consumer prices and wages, but it could not yet establish how much of the shock would pass through later. The timing and scale may depend on the duration of high energy prices, firms’ ability to absorb costs, and whether demand allows companies to restore profit margins.
The inflation projection also relies on energy-price assumptions based on futures markets, which can change. The supplied summary and minutes do not specify the eventual size or timing of any further rate changes, nor do they give a revised detailed forecast for economic growth. The committee said it would monitor pay, pricing behaviour and spare capacity as it evaluates the outlook.
Committee Reviews Evidence in December
The next Bank Rate decision is due on Dec. 17, 2026. Ahead of that meeting, the committee said it would assess developments in underlying pay, firms’ pricing behaviour and slack in the economy, with particular attention to whether elevated energy costs spread into broader inflation. It may adjust Bank Rate as needed, but the November minutes do not pre-commit to a further increase or a reduction.
Energy-market developments and incoming inflation and activity data will help shape the next assessment. The Bank’s stated objective remains a return of CPI inflation to 2% in the medium term; the route and pace depend on how the shock evolves and how persistent its effects prove to be.
Key Questions
What is the new Bank of England base rate?
Bank Rate is 4% after the Monetary Policy Committee raised it by 0.25 percentage points at its meeting ending Nov. 4, 2026.
How did committee members vote?
The vote was 8–1 in favour of raising Bank Rate to 4%. One member preferred a larger 0.5 percentage-point increase, which would have taken the rate to 4.25%.
Why did the Bank raise rates?
The committee cited rising global energy prices, inflationary pressure building in the pipeline and activity data that had generally been stronger than expected. UK CPI inflation was 3.5% in September.
How high does the Bank expect inflation to go?
The Bank said inflation was expected to rise to around 5% by the middle of 2027, then fall as energy-price effects fade and monetary policy bears down on inflation. This is a projection, not a confirmed outcome.
When is the next Bank Rate decision?
The next decision is due on Dec. 17, 2026. The committee has said its future decisions will depend on incoming evidence, including energy prices, pay and firms’ pricing behaviour.
Source: bankofengland.co.uk
