Traders now put the chance of another Bank of England rate rise in December at almost three in four, after the central bank's first increase in more than three years.

Overnight index swap pricing implies a 73% chance of a 25-basis-point rise at the Monetary Policy Committee's next meeting on 17 December 2026, according to RateProbability data as of 11 November. Reuters, citing LSEG data, put the figure at near 72%.

That is a sharp move from the days around the Bank's last decision. Before the 5 November meeting, traders priced roughly a one-in-four chance of a further rise in December; shortly after the decision, Reuters put the odds at about 50%.

Bank Rate at 4% after first rise since 2023

The Bank raised Bank Rate from 3.75% to 4% on 5 November, by eight votes to one, its first increase since August 2023. Catherine Mann, the sole dissenter, voted for a half-point rise to 4.25%.

The Bank's forecasts assume inflation, which was 3.5% in September, rising to about 4.5% in the first quarter of 2027 and about 5% in the second, driven in large part by energy prices. The National Institute of Economic and Social Research expects stronger UK growth in 2026 but warns inflation may not return to the Bank's 2% target until late 2030.

What markets expect next

Markets are pricing a net 82 basis points of rises over the next 12 months, equivalent to just over three quarter-point moves, according to RateProbability.

Governor Andrew Bailey has said he can see the argument for a further increase without news that softens inflation risks. The Bank has stressed, however, that policy is not on a pre-set path, and analysts caution that further rises risk slowing an already weak economy. The next decision is due on 17 December.