Bank of England Expected to Raise Interest Rate to 4%

What changed

The Bank of England is expected to raise its benchmark interest rate from 3.75% to 4% on Thursday, the first increase since August 2023 after six unchanged decisions by its Monetary Policy Committee.

Inflation rose to 3.5% in September 2026, up from 3.1% in August and above the Bank’s 2% target. The decision is due at 12:00 GMT, with attention fixed on what policymakers say about the path ahead.

Why it matters

This is a small move with a very direct household cost. A quarter-point rise would add about £31 a month for a typical tracker mortgage holder. There are 510,000 people on those deals. The 470,000 borrowers with variable-rate mortgages could face an increase of about £14 a month, depending on how their lenders respond.

Fixed-rate borrowers are insulated today, but not indefinitely. Average two-year and five-year fixed mortgage rates were already 5.96% and 5.99% respectively on 4 November. Anyone refinancing from a much cheaper deal could see the real shock when the old rate expires.

The informed outlook is that Thursday’s decision matters less than whether it marks a fresh turn in borrowing costs. If inflation keeps rising because of petrol, diesel and energy prices, the Bank will have less room to ease rates while growth is weakening. Savers, meanwhile, could receive better returns as lenders adjust deposit rates, though the benefit will depend on how quickly and fully those changes are passed on.