Bank of England Raises Rates to 4% as Further Increase Looms

What changed

The Bank of England raised interest rates to 4% on 5 November 2026 and signalled that another increase may follow. Its nine-member voting committee is split: three members pointed to multiple rises, one wanted 4.25%, and three backed only one more increase.

Why it matters

The likely path is one more rise, possibly in February, then a pause. That is informed speculation, not a promise: the next move depends partly on how long the Iran war lasts and how it affects energy prices and inflation.

The pressure is already visible at home. A typical household energy bill is expected to jump 27% in January, reaching £2,150 a year, while inflation is forecast to approach 5% next spring. Variable-rate mortgage holders will feel the Bank’s decision first through higher monthly payments.

The Bank is also responding to an economy that has held up better than expected. Growth reached 0.6% and 0.5% in the first two quarters, with 0.7% forecast for July to September. Unemployment has stabilised or edged down, and sterling is at its highest level since the Brexit referendum against a basket of currencies. A stronger pound can make imports cheaper, helping to contain price pressure.

The uncertainty cuts both ways. The Bank’s forecast used oil at an average of $108 a barrel, but the reported current price was 13% lower. If energy prices stay below that assumption, the case for repeated rate rises weakens. If the war continues to push prices higher, another increase becomes more likely.