Business · Economy · 1 hr ago
Bank of England raises interest rates to 4% for first time in three years
The Bank of England raised its interest rate to 4%, a quarter-point increase and its first rise in more than three years.
The decision was driven by concerns about an inflation spike.
Officials also cited the risk of an energy price shock this winter.
Higher interest rates can affect the cost of mortgages and the returns people receive on savings.
The change matters to households as they weigh borrowing costs against returns on money saved.
The sources do not say what the Bank plans to do next.
The Bank of England raised its key interest rate by 0.25 percentage points to 4%, the first increase in more than three years.
The Monetary Policy Committee said it acted to control rising inflation, which it linked to higher energy and fuel prices amid the conflict involving Iran.
The Bank warned further increases may follow if the conflict is not resolved.
It expects inflation to peak at around 5% in the second quarter of 2027 before falling to its 2% target in the third quarter of 2028.
For a £350,000 tracker mortgage, the increase adds about £50 to monthly payments, according to the Evening Standard.
- Who
- The Bank of England’s Monetary Policy Committee.
- What
- It raised the base rate by 0.25 percentage points to 4%. It warned that further hikes may follow if the conflict in the Middle East is not resolved.
- When
- Thursday, November 5, 2026.
- Where
- The United Kingdom.
- Why
- The Bank said it needed to control rising inflation, driven in part by higher energy and fuel prices linked to the conflict involving Iran.
This story does not have two clearly opposing sides.
The Independent reported that borrowing costs last rose in August 2023.
UK Consumer Prices Index inflation reached 3.5%, its highest level in 11 months, according to the Evening Standard.
The Bank of England raised its base rate from 3.75% to 4%.
The Bank expects inflation to peak at around 5%.
The Bank expects inflation to reach its 2% target.
- New base rate
- 4%
- Rate increase
- 0.25 percentage points
- Previous base rate
- 3.75%
- Tracker mortgage example
- About £50 more per month on a £350,000 mortgage
- Inflation forecast peak
- Around 5% in the second quarter of 2027
- Inflation target forecast
- 2% in the third quarter of 2028
8 sources
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What people are saying
There is now enough inflationary pressure in the pipeline caused by the rise in energy prices, that an increase in Bank rate is warranted.
Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes.
But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase.