Bank of England raises Bank Rate to 4% in an 8-1 vote
The Monetary Policy Committee lifted rates by 0.25 percentage points from 3.75%, with Catherine L Mann voting for a half-point rise, and said policy was not on a pre-set path.
By Daily Oracles News Team3 min read
Bank Rate is now 4%. The Bank of England's Monetary Policy Committee voted by 8-1 at its meeting ending on Wednesday 4 November to raise it by 0.25 percentage points from 3.75%, and published the decision on Thursday. It is the Bank's first increase since August 2023.
Eight members backed the quarter-point rise: Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor. Catherine L Mann voted against, preferring a half-point increase to 4.25%.
Energy prices and the inflation outlook
In its Monetary Policy Summary, the Bank said the conflict in the Middle East was in its ninth month and global energy prices had kept rising from an already high level. CPI inflation reached 3.5% in September, and the Bank expects it to climb to around 5% by the middle of next year, then fall as the effect of higher energy prices on annual inflation rates fades.
The committee said there was still limited evidence of higher energy costs spreading into other prices and wages, but that the inflationary pressure building in the pipeline was now enough to justify a rise. It added that activity data in recent months had generally been stronger than expected.
The minutes give more detail on the energy shock. Over the 15 UK working days to 27 October, front-month Brent crude futures averaged $108 a barrel and UK front-month gas futures 216 pence per therm, which the Bank put at 38% and 81% above their levels at the time of the July Monetary Policy Report. In September's inflation figure, direct energy effects contributed around 1 percentage point, mostly through fuels. Bank staff's near-term projection had headline inflation at around 4½% in the first quarter of 2027 and around 5% in the second.
The Budget on 28 October was also factored in. The committee judged that its new measures would take ¼ percentage point off CPI inflation by the second quarter of 2027.
The minutes also record that benchmark two-year mortgage rates had risen by nearly 50 basis points since the start of September, and that new mortgage approvals for households had been falling while growth in lending to businesses stayed strong.
Split views on what follows
All nine members wanted higher rates, but their individual statements part ways on what should follow. Mann argued that a 50 basis point rise was needed on risk management and credibility grounds. Among the majority, Pill wrote that a single quarter-point increase was unlikely to be enough, and Greene said additional rises would likely be required. Taylor took a different view, describing the rise as a single insurance move rather than the start of a series and saying the next change could be up, down or sideways.
The summary itself states that monetary policy is not on a pre-set path. The committee said it would keep watching how far high energy prices feed through to other prices, looking in particular at underlying pay, pricing behaviour and spare capacity, and would adjust Bank Rate as needed to bring inflation back to the 2% target in the medium term.
The stock of government bonds held for monetary policy purposes stood at £362 billion on 4 November.
Next decision
The committee's next meeting ends on Wednesday 16 December, with the decision and minutes due on Thursday 17 December 2026.
