The Bank of England raised Bank Rate from 3.75% to 4% on 5 November 2026, its first increase in more than three years. The Monetary Policy Committee voted 8-1 for the quarter-point rise, with one member preferring a larger rise to 4.25%. The Bank acted because a prolonged energy price shock, driven by the conflict in the Middle East, is pushing UK inflation higher and risks making that inflation persistent.

UK CPI inflation was 3.5% in September 2026, and the Bank now expects it to rise to around 5% by the middle of next year before falling back. Its target is 2%. Raising Bank Rate is the Bank's main tool for cooling demand and for stopping a temporary rise in prices from feeding into wages and prices across the economy.

Why did the Bank of England raise interest rates?

The Bank's own summary of the November decision puts the reason plainly: global energy prices have continued to rise from an already elevated level, the conflict in the Middle East is now in its ninth month, and the inflationary pressure already in the pipeline was sufficient to warrant an increase in Bank Rate. The Committee said there was still limited evidence of so-called second-round effects, where higher energy costs feed into wider wage and price setting, but it judged that the risk of those effects emerging had risen further since September.

Deputy Governor Clare Lombardelli, who voted for the rise, said in a speech on 10 November 2026 that the conditions for persistent inflation were crystallising. She said the energy shock had lasted longer and become larger than expected, activity had been more resilient than expected, and recent data suggested that underlying disinflation may have stalled. In her words, that warranted an increase in Bank Rate last week.

What did Clare Lombardelli say about another rise?

Lombardelli signalled that another rise could follow soon if inflation pressures do not weaken. She said: "In the absence of evidence of weaker inflation pressures, I continue to think there is likely to be a case for a further increase in rates in the near term." She added that she would not rule December or February in or out, and that her vote would be affected by developments in the Middle East and by new data on prices and the labour market.

Governor Andrew Bailey has also said further rate increases were likely if the war is not resolved. The Bank's November forecast has inflation jumping to around 5% in the second quarter of 2027, up from 3.5% now, and the Bank has warned that in an adverse scenario inflation could reach 6%. Most economists are pencilling in another rate rise in February, although the timing remains dependent on how the conflict and energy prices develop.

What does a 4% Bank Rate mean for mortgages and savers?

Bank Rate is the rate the Bank of England charges banks to borrow, and it influences the rates banks charge their own customers. When Bank Rate rises, borrowing generally becomes more expensive: new fixed-rate mortgages and variable-rate mortgages tend to be priced higher, and the cost of other loans can rise too. People on tracker mortgages usually see the change feed through quickly, while people on fixed deals are affected when their deal ends.

For savers, a higher Bank Rate can mean better returns on savings accounts, although banks do not always pass the full rise on, and they do not all move at the same speed. The overall effect is deliberate: higher rates are meant to restrain spending and borrowing so that inflation falls back towards the 2% target. This article is general information about how the decision works, not personal financial advice.

When is the next Bank of England decision?

The Monetary Policy Committee's next meeting ends on 16 December 2026, with its minutes published on 17 December 2026. That meeting will be the first chance for the Committee to act on Lombardelli's signal of a possible further rise in the near term. Its decision will depend on the latest inflation, wage and energy price data, and on whether there is any progress towards resolving the conflict in the Middle East.

Frequently asked questions

Why did the Bank of England raise interest rates to 4%? Because energy prices have kept rising during the conflict in the Middle East, UK inflation was 3.5% in September and is forecast to reach around 5% in mid-2027, and the Bank judged that the risk of inflation becoming persistent warranted a rise.

When did the Bank of England raise rates to 4%? At its meeting ending on 4 November 2026, announced on 5 November 2026. The vote was 8-1, with one member preferring a rise to 4.25%.

Will the Bank of England raise interest rates again? Possibly. Deputy Governor Clare Lombardelli said on 10 November 2026 that there is likely to be a case for a further increase in the near term unless there is evidence of weaker inflation pressures. No date has been decided.

What is the Bank of England's inflation target? 2% for CPI inflation, measured over the medium term.