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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 4 November 2026, voting 8–1. The Bank said UK inflation was 3.5% in September and could rise to around 5% by mid-2027, with high energy prices driving the outlook.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% after a meeting ending 4 November 2026, as higher global energy prices pushed up inflation risks. The Monetary Policy Committee voted 8–1; one member preferred a larger increase, to 4.25%.
The Bank said UK CPI inflation reached 3.5% in September and is now expected to rise to around 5% by the middle of next year. It expects inflation to fall later as the effect of higher energy prices drops out of the 12-month comparison and restrictive monetary policy weighs on demand and price pressures. The Bank’s forecast is conditional, and the minutes describe considerable uncertainty around the energy outlook.
Global energy prices had risen from an already elevated level amid the conflict in the Middle East, which the Bank said was in its ninth month. In the 15 UK working days to 27 October, the front-month Brent crude futures contract averaged $108 a barrel, while the UK front-month natural gas futures contract averaged 216 pence per therm. The Bank’s minutes said those averages were respectively 38% and 81% above their levels at the time of its July Monetary Policy Report.
The Committee said direct energy costs were already contributing to inflation and would continue to affect household and business bills. It had seen limited evidence so far that those costs were spreading widely to other prices and wages. However, members judged the inflation pressure in the pipeline warranted a rate increase. Recent economic activity data had also generally been stronger than expected, adding to the case for tighter policy.
Higher Rates Meet Rising Energy Costs
The increase raises the cost of borrowing linked to Bank Rate, including some mortgages and business loans, while potentially supporting returns on some savings products. The effect on individual borrowers depends on their lender, product and timing: the Bank’s decision does not automatically change every mortgage or savings rate.
The policy choice reflects a tension identified in the minutes. The Bank cannot set global energy prices, but it can respond if higher costs become embedded in wages and prices across the UK economy. Raising rates may restrain domestic demand and limit persistent inflation; it can also weigh on activity. The Committee said it would watch for second-round effects while taking account of economic weakness and spare capacity.
The projected rise in inflation matters to households and firms planning budgets, but the Bank’s estimate is a forecast rather than a certainty. Energy prices, the duration of the conflict and the response of businesses and workers could all change the path.
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Why Energy Prices Shaped the Vote
The MPC’s decision followed a period of rising energy costs tied to geopolitical developments. The minutes said oil and gas futures had increased since the July Monetary Policy Report and remained sensitive to news about the conflict. A sustained de-escalation could bring prices down, the Bank said, while continued fighting, wider regional escalation or further damage to refining capacity could keep them higher. These are scenarios described in the minutes, not confirmed outcomes.
September’s 3.5% inflation figure included an estimated contribution of around 1 percentage point from direct energy effects, most of it from fuels, according to the Bank. It said there had been little sign so far of indirect effects on other consumer goods, and food inflation had been lower than expected earlier in the year. Some firms were shielded temporarily by hedging or fixed-price contracts; Bank agents also reported that businesses were absorbing some higher costs through lower profit margins.
The Bank’s stated objective remains returning CPI inflation to 2% in the medium term. It says policy is not on a pre-set path and will be reviewed as evidence changes.
How Far Energy Costs Will Spread
It is not yet clear how long elevated energy prices will last or how much of the increase firms will eventually pass on to consumers. The minutes say there is limited evidence so far of broader effects on prices and wages, but warn that indirect effects could be delayed. Some businesses have not yet faced the full increase because of hedging or fixed-price contracts, and the extent to which they can keep absorbing costs is uncertain.
The inflation projection also depends on energy-price assumptions and the course of the conflict. The available source material does not set out the full accompanying Monetary Policy Report or every member’s reasoning in detail. It therefore does not establish how the outlook would change under different energy-price paths or specify the likely timing of any later rate moves.
The December Rate Decision
The MPC’s next Bank Rate decision is due on 17 December 2026. Before then, the Committee says it will assess new evidence at each meeting, focusing on underlying pay, firms’ pricing behaviour, economic slack and the degree to which high energy prices feed through to other prices and the wider economy.
The committee has not committed to a particular path for rates. Its next move will depend on whether inflation pressures persist, how activity develops and whether the energy shock eases or intensifies. The November decision sets the current rate at 4%; it does not confirm what the MPC will decide in December.
Key Questions
What is the Bank of England’s Bank Rate now?
Following the November 2026 decision, Bank Rate is 4%. The MPC raised it by 0.25 percentage points.
How did the committee vote?
The vote was 8–1. One member voted for a larger increase, taking the rate to 4.25%.
Why did the Bank raise rates?
The Bank cited rising global energy prices, inflation of 3.5% in September and the risk that price pressures could persist. It also said recent activity data had generally been stronger than expected.
When is the next Bank Rate decision?
The Bank says the next decision is due on 17 December 2026. The MPC has not said in advance what it will decide.
Will inflation reach 5%?
The Bank expects inflation to rise to around 5% by the middle of next year, but that is a forecast, not a confirmed outcome. The minutes say the outlook depends in part on energy prices and whether higher costs spread to other prices and wages.
Source: bankofengland.co.uk
