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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. The Bank said UK inflation was 3.5% in September and could rise to around 5% by the middle of next year, with higher energy prices driving the outlook.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% after its Monetary Policy Committee voted 8–1 at a meeting ending 4 November 2026. The increase comes as UK inflation has risen and the Bank expects it to reach around 5% by the middle of 2027, largely reflecting higher global energy prices.
One committee member voted for a larger increase of 0.5 percentage points, to 4.25%. The other eight supported the quarter-point rise. The Bank said September consumer price inflation was 3.5%, with direct energy effects contributing about one percentage point, most of that from fuel.
The November summary says inflation is expected to rise further before falling as the effects of higher energy prices drop out of the annual comparison and restrictive monetary policy continues to weigh on demand. The Bank said it had seen limited evidence so far that energy costs were feeding through to other prices and wages, but judged the inflation risks sufficient to warrant the rate increase.
In the minutes, the committee described the prolonged conflict in the Middle East and its effect on global energy prices as the main source of uncertainty for the UK inflation outlook. Over the 15 UK working days ending 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 said those averages were 38% and 81% above their levels at the time of its July Monetary Policy Report, respectively.
How the Rate Rise Affects Borrowing
A higher Bank Rate can increase borrowing costs for households and businesses, although the effect on individual mortgages, savings products and loans depends on the terms set by lenders. People with variable-rate borrowing may face changes more quickly than those on fixed rates; fixed-rate borrowers are generally affected when they refinance or take out a new loan.
The committee’s decision also signals that it is prioritising the risk that higher energy costs become more persistent across the economy. The Bank cannot set global oil or gas prices, but it can use monetary policy to influence domestic demand and inflation. Its stated aim remains returning CPI inflation to 2% in the medium term, while weighing that goal against the risk that tighter policy weakens economic activity.
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Energy Costs Shape November’s Decision
The Bank said energy prices remained sensitive to geopolitical developments and had risen further since the assumptions in its July 2026 Monetary Policy Report. Higher wholesale prices can reach household energy bills and business costs over time, but the timing and scale vary. The minutes note that some firms had not yet experienced large increases in gas or electricity costs because of hedging or fixed-price contracts.
The committee also reported that many firms were absorbing some costs through lower profit margins, while food inflation had remained lower than expected earlier in the year. It said those developments could mean indirect effects on consumer prices were smaller than feared, or merely delayed. The outlook therefore depends partly on how long energy prices stay high and whether businesses can continue absorbing costs.
How Far Energy Costs Will Spread
The Bank said it remained uncertain how long the energy shock would last and how much of the resulting cost pressure would reach prices and wages. It noted that a sustained easing of the Middle East conflict could bring energy prices down, while continued conflict, wider regional escalation or further damage to refining capacity could keep them higher than current futures prices imply.
The committee also said it had limited evidence of indirect inflation effects so far. It is not yet clear whether this reflects firms absorbing costs, delays caused by energy contracts, or a weaker eventual pass-through. The supplied summary and minutes do not specify the size or timing of any future rate changes.
December Decision Will Reassess Inflation
The next Bank Rate decision is due on 17 December 2026. The committee said it will assess the evidence at each meeting, focusing in particular on energy costs and their potential effects on underlying pay, firms’ pricing behaviour and spare capacity in the economy.
Until that decision, the Bank’s published guidance is that policy has no fixed path. The inflation outlook will depend on developments in global energy markets and incoming UK data; the November decision does not establish that rates will rise again.
Key Questions
What is the Bank of England’s Bank Rate now?
Following the November 2026 decision, Bank Rate is 4%.
How did the committee vote?
The Monetary Policy Committee voted 8–1 to raise the rate by 0.25 percentage points. One member preferred a 0.5-point rise, to 4.25%.
Why did the Bank raise the rate?
The Bank cited rising global energy prices, UK inflation of 3.5% in September and the risk that inflationary pressures could persist or spread to other prices and wages.
When is the next Bank Rate decision?
The next decision is due on 17 December 2026. The committee said it will review economic and inflation evidence at each meeting.
Will Bank Rate rise again in December?
The Bank has not committed to another increase. It said monetary policy is not on a pre-set path, so the next decision will depend on the evidence available at the time.
Source: bankofengland.co.uk
