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The Bank of England’s Monetary Policy Committee voted 8–1 to raise Bank Rate by 0.25 percentage points to 4% at its meeting ending 4 November 2026. The Bank expects UK inflation to rise from 3.5% in September to around 5% by mid-2027, while saying it will watch for energy costs to feed through into other prices and wages.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% after a majority of the Monetary Policy Committee voted for an increase at its meeting ending 4 November 2026. The Bank cited rising global energy prices, UK inflation of 3.5% in September and the risk that inflationary pressure could persist, even as it said there was limited evidence so far of higher energy costs spreading to other prices and wages.
The decision was passed by an 8–1 majority. One member voted for a larger, 0.5-percentage-point increase, which would have taken Bank Rate to 4.25%. The committee’s summary said the pressure building in the inflation pipeline was sufficient to justify the increase, while recent UK activity data had generally been stronger than expected and added to the case for tighter policy.
The Bank expects CPI inflation to rise to around 5% by the middle of 2027, before falling as the effects of higher energy prices drop out of the annual comparison and restrictive monetary policy weighs on inflation. The forecast depends in part on energy-price assumptions based on market futures. The committee said it would continue to judge how likely high energy prices are to affect other prices and economic activity.
In the minutes, members described the prolonged Middle East conflict and its effect on energy markets 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 contract averaged 216 pence per therm. The Bank said those averages were respectively 38% and 81% above their levels at the time of its July Monetary Policy Report.
Higher Rates Meet Rising Energy Costs
The increase raises the benchmark rate that influences borrowing costs across the UK economy. It can affect mortgage rates, business finance and returns on savings, although the effect on individual products depends on lenders, providers and the terms of existing agreements. The decision matters particularly because energy costs are rising while the Bank is trying to prevent a temporary price shock from becoming persistent inflation.
The committee said monetary policy cannot change global energy prices. Its task, instead, is to respond if those costs begin to affect prices and wages more broadly, while weighing the risk that tighter policy could weaken economic activity. The Bank said it would monitor underlying pay, firms’ pricing behaviour and spare capacity. The rate increase signals that members judged the inflation risk significant enough to act, despite limited evidence at the meeting of wider pass-through.
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The Inflation Risks Behind the Vote
September CPI inflation was 3.5%. The minutes said direct energy effects accounted for around one percentage point of that figure, most of it from fuels. The Bank expected these direct contributions to build over the next few quarters and then ease, reflecting comparison effects and the downward-sloping energy futures assumptions used in its forecast.
Members said there had so far been little sign of higher energy costs feeding into other consumer prices; food inflation, in particular, had been lower than expected earlier in the year. Some companies had not yet faced substantial increases in gas and electricity bills because of hedging or fixed-price contracts, while Bank intelligence indicated that some firms were absorbing costs through lower profit margins. The committee cautioned that these buffers might be temporary and that costs could eventually reach consumers if energy prices stay high.
“Monetary policy is not on a pre-set path.”
— The Bank of England’s Monetary Policy Committee
How Far Energy Costs Will Spread
The duration and scale of the energy shock remain uncertain. The Bank said prices are sensitive to geopolitical developments: a sustained de-escalation could lower them, while continued conflict, wider regional escalation or further damage to refining capacity could keep them higher than current futures prices imply. It also noted that reduced energy-supply buffers during 2026 could amplify price pressure.
It is not yet clear how much of the higher cost of energy firms will absorb, or how much they will pass on to customers. The minutes record limited evidence so far of indirect effects on consumer prices, but members differed over whether that reflected weaker effects or a delay. The supplied summary does not provide the full inflation forecast, the individual member’s reasoning for the larger increase, or a breakdown of how the rate change may affect specific household borrowing products.
Evidence Before the December Decision
The next Bank Rate decision is due on 17 December 2026. Before then, the committee said it would assess new evidence at each meeting, focusing on underlying pay, firms’ pricing behaviour and the amount of spare capacity in the economy. Energy prices and any signs that their effects are spreading beyond household and business energy bills will also shape its assessment.
The Bank has not committed to another increase or indicated a fixed path for rates. Its stated aim remains to return CPI inflation to the 2% target in the medium term. The December decision will depend on how the economic and inflation evidence develops; the November minutes do not establish what the committee will decide next.
Key Questions
What is the Bank of England’s Bank Rate now?
Bank Rate is 4% after the Monetary Policy Committee raised it by 0.25 percentage points at its meeting ending 4 November 2026.
How did the committee vote?
The vote was 8–1. One member preferred a 0.5-percentage-point increase, which would have taken Bank Rate to 4.25%.
Why did the Bank raise the rate?
The committee cited rising global energy prices, inflation of 3.5% in September and inflationary pressure it judged sufficient to warrant an increase. Stronger-than-expected activity data also added to the case for tighter policy.
What does the Bank expect inflation to do?
The Bank expects CPI inflation to rise to around 5% by mid-2027, then fall as the direct effects of higher energy prices fade and monetary policy bears down on inflation.
When is the next Bank Rate decision?
The next decision is scheduled for 17 December 2026. The committee has said future policy will depend on the evidence, including pay, pricing behaviour and economic slack.
Source: bankofengland.co.uk
