Bank of England raises interest rates to 4 percent

On Thursday, November 5, 2026, the Bank of England raised its benchmark interest rate to 4% from 3.75%, marking the first hike in three years. The decision was reached by the Monetary Policy Committee with a vote of 8 to 1. While the majority supported a 25-basis-point increase, Catherine Mann dissented, advocating for a sharper rise of 50 basis points to 4.25%.

The central bank cited rising inflationary pressures fueled by the conflict between the U.S. and Iran as the primary driver for this policy change. The Bank of England warned that inflation could reach approximately 5% by mid-2027, significantly exceeding the 2% target. Officials highlighted the role of sustained energy price hikes in driving this trend.

Governor Andrew Bailey noted that this decision does not necessarily signal a prolonged cycle of increases, though he cautioned that if the conflict in the Middle East remains unresolved, further interventions may be required. Following the announcement, the British pound strengthened against the U.S. dollar, while yields on two-year government bonds fluctuated.