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The Bank of England’s Monetary Policy Committee raised Bank Rate by 0.25 percentage points to 4% on 4 November 2026, with an 8–1 vote. The Bank said UK inflation reached 3.5% in September and could rise to around 5% by mid-2027, citing higher global energy prices; it said future rate decisions are not on a pre-set path.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% on 4 November, as the Monetary Policy Committee judged that rising global energy costs and stronger-than-expected activity warranted tighter policy. The committee voted 8–1; one member favoured a larger increase, to 4.25%.
The Bank’s November Monetary Policy Summary said UK CPI inflation was 3.5% in September and was expected to rise to around 5% by the middle of next year. It projected inflation would then fall as the direct effect of higher energy prices on annual inflation measures fades and restrictive monetary policy continues to weigh on prices. These are the Bank’s forecasts, not confirmed future outcomes.
The committee said the direct effect of higher energy prices on household and business bills was already clear, but evidence that the increases were spreading to other prices and wages remained limited. Members nevertheless judged that inflationary pressure in the pipeline justified raising Bank Rate. Recent UK activity data had also generally been stronger than expected, adding to the case for a modest increase.
The minutes report that Brent crude and UK natural gas futures averaged $108 a barrel and 216 pence per therm, respectively, over the 15 UK working days ending 27 October. Those averages were 38% and 81% above their levels at the time of the July Monetary Policy Report. The figures describe that specified period and comparison; they do not establish how prices will move next.
Higher Rates Meet Rising Energy Bills
The increase affects the cost of borrowing across the UK economy. Bank Rate influences interest rates offered by lenders and paid to savers, although the exact effect on individual mortgages, loans and deposit accounts varies by provider and product. Borrowers with rates linked to Bank Rate may be exposed sooner than those on fixed-rate deals, while households and firms may also face higher energy costs.
The decision reflects a difficult trade-off identified in the minutes: the Bank cannot set global energy prices, but it can seek to prevent an energy shock from becoming persistent inflation through higher wages and prices. Raising rates may restrain demand and price-setting, but the committee also said it must weigh that response against possible weakness in economic activity.
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Energy Shock Shapes the Inflation Outlook
The Bank said the conflict in the Middle East had entered its ninth month and remained the main source of uncertainty for the UK inflation outlook. Energy prices had risen from an already elevated level and remained sensitive to geopolitical developments. A sustained de-escalation could bring prices down, while further conflict, regional escalation or damage to refining capacity could keep them higher, the minutes said.
In September’s inflation reading, direct energy effects contributed about one percentage point, most of it from fuels, according to the committee. Members reported little sign so far of broad indirect effects on consumer prices, including food prices. Some companies had not yet experienced large increases in gas or electricity costs because of hedging or fixed-price contracts, while some firms were absorbing higher costs through lower profit margins. The committee cautioned that these buffers might be temporary.
The committee’s central concern was whether energy costs would feed into wider prices and pay. It said the outlook depended on how long the shock lasted, whether firms could absorb costs, and the state of demand and spare capacity. The source material does not include the full November Monetary Policy Report or the remainder of the published minutes, so it does not provide every forecast assumption or detail of the discussion.
How Far Costs Will Spread
The main uncertainty is whether high energy prices will remain elevated and pass through to goods, services and wages. The Bank said there was limited evidence so far of those wider effects, but noted that some firms had yet to face higher utility bills and might later pass costs on as hedges or fixed-price arrangements expire. It also said businesses may initially absorb increases by accepting lower margins.
The source does not establish whether inflation will reach the projected level of around 5% or how quickly it will fall afterward. Those estimates depend on energy prices and other economic conditions. Nor does the decision settle the direction of the next rate move: the committee said it would assess evidence meeting by meeting.
December Decision Will Follow New Data
The Bank lists its next Bank Rate decision for 17 December 2026. Ahead of that meeting, the committee says it will monitor underlying pay, firms’ pricing behaviour and economic slack, with particular attention to whether high energy prices produce wider or more persistent inflation.
The November decision sets the rate at 4% for now; it does not commit the committee to another increase, a cut or a particular timetable. The next decision will depend on the evidence available to policymakers, including how energy prices and domestic inflation pressures develop.
Key Questions
What rate did the Bank of England set in November 2026?
The committee raised Bank Rate to 4%, a quarter-point increase, at the meeting ending 4 November 2026.
How did the committee vote?
The vote was 8–1. One member voted for a larger, half-point increase to 4.25%.
Why did the Bank raise the rate?
The Bank cited rising global energy costs, inflationary pressure in the pipeline and UK activity data that had generally been stronger than expected. It said wider effects on other prices and wages had so far been limited.
What inflation does the Bank expect?
The Bank said CPI inflation was 3.5% in September and expected it to rise to around 5% by the middle of 2027, before falling as energy-related effects fade. This is a forecast, not a guarantee.
When is the next Bank Rate decision?
The Bank lists 17 December 2026 as the next decision date. It says future policy will depend on incoming evidence rather than a pre-set path.
Source: bankofengland.co.uk
