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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 said inflation was 3.5% in September and could reach around 5% by the middle of next year as higher global energy prices feed through.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% after a majority of its Monetary Policy Committee voted for an increase at a meeting ending 4 November 2026. The decision responds to rising global energy prices and the risk that they will keep UK inflation elevated, with the Bank reporting that consumer price inflation reached 3.5% in September.
The MPC voted 8–1 for the quarter-point rise. One member preferred a larger increase of 0.5 percentage points, to 4.25%. The Bank said inflation is expected to rise to around 5% by the middle of next year, before falling as the direct impact of energy costs on annual inflation fades and restrictive monetary policy weighs on price pressures.
In its summary, the Committee said the direct effect of higher energy prices on household and business bills was clear, but evidence of knock-on effects on other prices and wages remained limited. It nevertheless judged that the inflationary pressure building in the pipeline warranted a rate increase. Recent activity data had also generally been stronger than expected, adding to the case for tighter policy.
The Bank said it would pay close attention to pay, firms’ pricing behaviour and spare capacity in the economy. It stressed that rates are not on a pre-set path and that future decisions will depend on the evidence available at each meeting. The Committee’s stated aim remains returning CPI inflation to its 2% target in the medium term.
Higher Rates Meet Rising Energy Costs
The increase raises the benchmark rate used across the UK financial system, affecting the cost of borrowing and returns on some savings. The timing matters because households and businesses are also facing rising energy costs. The rate decision is intended to limit the risk that an initial jump in energy prices spreads into wider inflation through higher prices and wage demands.
The Bank cannot control global oil and gas prices, and it acknowledged that monetary policy cannot prevent the direct energy shock. Its concern is whether those costs become persistent across the wider economy. Higher interest rates can restrain demand and price-setting, but may also weigh on activity. The Committee said it would consider that trade-off while seeking to return inflation to target.
The inflation forecast is not a certainty: the Bank’s expectation of inflation near 5% by mid-2027 depends in part on how energy prices evolve and how much of the cost increase firms pass on. The decision signals the MPC’s current assessment of those risks, rather than a commitment to repeat rate increases.
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Energy Shock Shapes the November Decision
The MPC described the prolonged conflict in the Middle East, then in its ninth month, as a major source of uncertainty for the UK inflation outlook. In the 15 UK working days to 27 October, the front-month Brent crude oil futures contract averaged $108 a barrel, while the comparable UK natural gas contract averaged 216 pence per therm. The Bank said those averages were 38% and 81% above their levels at the time of its July Monetary Policy Report.
The Committee said energy-market prices remain sensitive to geopolitical developments. A sustained de-escalation could bring prices down, while continued conflict, wider regional escalation or further damage to refining capacity could keep them higher. It also noted that energy supply buffers had been drawn down during 2026, potentially amplifying price pressures.
In September’s 3.5% CPI reading, direct energy effects accounted for about 1 percentage point, most of it from fuels, according to the minutes. The Bank reported little evidence so far that higher energy costs had substantially raised prices for other consumer goods; food inflation, in particular, had been lower than expected earlier in the year. Some businesses were absorbing costs through lower profit margins, while fixed-price contracts and hedging meant not all had yet faced higher gas or electricity bills.
Pass-Through Beyond Energy Bills
It is not yet clear how long global energy prices will remain elevated or how much of the increase businesses will pass on to consumers. The minutes say the scale and duration of the shock, firms’ ability to absorb costs and the strength of demand will shape indirect effects. Some firms had not yet experienced large increases in gas or electricity costs because of hedging or fixed-price agreements, so the full impact may not yet be visible.
The Bank’s forecast that inflation could reach around 5% by mid-2027 is an expectation, not a confirmed outcome. The source material does not specify how households’ borrowing costs, savings rates or economic growth will change as a direct result of this decision. It also does not establish whether the energy shock will produce the second-round effects the Committee is monitoring.
MPC Reviews Evidence in December
The next Bank Rate decision is due on 17 December 2026. Before then, the MPC says it will monitor inflation, underlying pay, business pricing behaviour and the amount of spare capacity in the economy, alongside developments in energy markets. It will assess whether higher energy costs are spreading into broader prices and wages.
The Bank has not promised another increase or indicated that rates will follow a fixed course. Its next decision will depend on the evidence available at that meeting and the Committee’s assessment of what is needed to return inflation to 2% in the medium term.
Key Questions
What is the Bank Rate after the November 2026 decision?
Bank Rate is 4%, after a 0.25 percentage-point increase.
How did the MPC vote?
The vote was 8–1 in favour of the quarter-point rise. One member voted for a larger increase, which would have taken the rate to 4.25%.
Why did the Bank raise rates?
The Bank cited rising global energy prices, inflation of 3.5% in September and the risk that inflationary pressure could build. Stronger-than-expected activity data also added to the case for a modestly tighter policy.
Could inflation reach 5%?
The Bank said inflation is expected to rise to around 5% by the middle of next year, then fall as direct energy effects fade and monetary policy bears down on inflation. This is a projection, not a confirmed future reading.
When is the next Bank Rate decision?
The next decision is due on 17 December 2026. The MPC says its policy is not on a pre-set path and will depend on incoming evidence.
Source: bankofengland.co.uk
