The Bank of England raised interest rates to 4% on Thursday, November 5, 2026, in its first rate hike since August 2023. The Bank Rate went up by 25 basis points from 3.75% to 4%, ending a run of six meetings in a row where rates were left unchanged. The Monetary Policy Committee voted 8 to 1 in favour of the move. The Bank acted because inflation is rising again, driven by energy prices as the Middle East conflict enters its ninth month, and it warned that more rises may follow if the conflict keeps pushing prices up.
Quick Facts
| Decision | Bank Rate raised by 25 basis points to 4% |
| Previous rate | 3.75% |
| Date of decision | Thursday, November 5, 2026 |
| Last rate hike before this one | August 2023 |
| Committee vote | 8 to 1 in favour of the quarter-point rise |
| Dissenter | Catherine Mann, who voted for a bigger half-point rise to 4.25% |
| Governor | Andrew Bailey |
| UK inflation in September | 3.5% |
| Inflation forecast | Around 5% by the middle of next year |
| Bank of England inflation target | 2% |
| Main driver | Energy prices, as the Middle East conflict enters its ninth month |
| Growth forecast this year | 1.6% |
| Growth forecast next year | 1.3% |
| Sterling after the decision | About $1.3477 |
| Two-year gilt yield | About 4.76% |
| Next decision | December 17, 2026 |
What the Bank of England Decided and Who Voted How
The Bank of England raised Bank Rate by a quarter of a percentage point to 4% on November 5, 2026. It was the first increase since August 2023, and it broke a long stretch of inaction. For six meetings in a row the Bank had held rates steady, waiting to see whether inflation would keep falling toward its 2% target. That wait is now over. The Bank decided that waiting longer would risk letting inflation get out of control, so it moved.
The vote was 8 to 1. Eight members of the Monetary Policy Committee backed the quarter-point rise: Governor Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor. The one member who disagreed was Catherine Mann, and she did not disagree because she wanted rates to stay put. She voted for a bigger move, a half-point rise to 4.25%. In other words, nobody on the committee wanted to hold rates steady. The only argument was about how fast to raise them.
That detail matters. A committee that votes 8 to 1 for a rise, with the single dissenter pushing for an even bigger rise, is sending a clear message. The Bank believes inflation is a live problem again, not a fading one. Deputy Governor Clare Lombardelli added weight to that message when she said a further hike was likely needed in the near term if the conflict in the Middle East continues. The next decision is only weeks away, on December 17.
For readers following the wider market mood this week, our report on the Dow surging 1,569 points in its best post-midterm day since 1982 shows how strongly global markets have reacted to the same week of political and economic news.
Why Inflation Is Heading Toward 5%
UK inflation stood at 3.5% in September, already well above the Bank of England target of 2%. The Bank now expects it to climb to around 5% by the middle of next year. That would be more than double the target, and it is the main reason the Bank felt it had to act now rather than wait for the December meeting.
The main driver is energy. The Middle East conflict has now entered its ninth month, and energy prices have risen as a result. Higher energy costs feed into almost everything else. They raise the cost of heating homes, running businesses, moving goods and growing food. When energy gets more expensive, those higher costs slowly work their way through the whole economy, and that is what the Bank is trying to stop.
The Bank also revised its growth forecasts upward. It now expects the UK economy to grow by 1.6% this year and 1.3% next year. Stronger growth gives the Bank more room to raise rates, because higher borrowing costs are less likely to push a growing economy into a downturn.
This is a change of direction after more than three years. The last hike was in August 2023, back when the Bank was still fighting the inflation surge that followed the pandemic and the war in Ukraine. Since then the story had been one of slow falls and long holds. Now the story has flipped. Inflation is rising again, the Bank is raising rates again, and the question is how far it will go.
What a Base Rate Rise Means for Your Mortgage
Bank Rate is the rate the Bank of England charges banks to borrow money. When it goes up, banks usually pass the higher cost on to their customers. That is why a base rate rise matters so much to anyone with a mortgage, and the effect depends on the kind of mortgage you have.
If you have a tracker mortgage, your rate follows Bank Rate directly. A rise of 0.25 percentage points means your monthly payment goes up, usually within a month or so. On a loan of 200,000 pounds over 25 years, a quarter-point rise adds roughly 25 to 30 pounds a month. That may not sound huge on its own, but a second hike in December would add a similar amount again.
If you have a standard variable rate mortgage, your lender can choose whether to pass the rise on in full, in part, or not at all. In practice most lenders do pass it on, because their own costs have gone up. If you have a fixed-rate mortgage, your monthly payment does not change until your fixed deal ends. That is the protection a fix gives you. The catch is that when your fix does end, the new deals on offer will be priced off the higher Bank Rate.
The practical advice is simple. Check what kind of mortgage you have and when your current deal ends. If your fix ends soon, start looking at new deals early, because lenders often let you lock in a rate a few months ahead. If you are on a tracker or a variable rate, work out what the extra monthly cost looks like and check whether your budget can absorb another rise in December.
What the Rise Means for Savers
For savers, a rate rise is better news, though the benefit is often slower and smaller than the pain felt by borrowers. When Bank Rate goes up, banks can afford to pay more on savings accounts, and competition between banks usually pushes some of that rise through to savers. Easy-access accounts and fixed-rate savings deals tend to improve first, and cash ISAs follow.
There is one more point worth making. Even at 4%, Bank Rate is still below the expected inflation rate of around 5% next year. That means money sitting in a savings account may still lose buying power over time, because prices are rising faster than the interest you earn.
How Markets Reacted and What Happens Next
Markets took the decision in their stride. Sterling edged up to about $1.3477 after the announcement, a sign that investors see higher UK rates as supportive for the pound. Two-year gilt yields, which reflect what investors expect short-term interest rates to be, rose to about 4.76%. When gilt yields rise, it usually means markets expect rates to stay higher for longer, and that borrowing costs for the government and for businesses will stay elevated too.
The Bank of England decision came in a week of big market moves around the world. In the United States, strong corporate earnings have also been driving markets, including our coverage of AppLovin surging on record third-quarter revenue on November 4. The common thread is that investors are re-pricing their expectations fast as new data arrives, and central bank decisions are a big part of that repricing.
All eyes now turn to December 17, the date of the next decision. Deputy Governor Clare Lombardelli has already said a further hike is likely in the near term if the Middle East conflict continues. That makes the next few weeks important. If energy prices keep rising, the Bank is likely to raise rates again. If the conflict eases and energy prices fall back, the Bank may decide to wait. Either way, the era of six straight holds is over, and borrowers and savers alike should plan on the basis that rates are moving up, not down, for now.
The global backdrop matters too. Our report on Novo Nordisk raising its 2026 outlook as Wegovy pill sales surge is a reminder that company results and consumer spending are still holding up in many parts of the world, which is part of why central banks feel they can act against inflation without fearing an immediate slowdown.
Frequently Asked Questions
What is the Bank of England base rate now?
The Bank Rate is now 4%, after the Bank of England raised it by 25 basis points from 3.75% on Thursday, November 5, 2026. It was the first rate hike since August 2023.
Why did the Bank of England raise interest rates?
The Bank raised rates because inflation is rising again. UK inflation was 3.5% in September, and the Bank expects it to reach around 5% by the middle of next year, driven by energy prices as the Middle East conflict enters its ninth month.
Will interest rates rise again in December?
It is possible. Deputy Governor Clare Lombardelli said a further hike was likely needed in the near term if the Middle East conflict continues. The next decision is on December 17, 2026, and it will depend on how energy prices and inflation develop in the meantime.
How does a rate rise affect my mortgage?
If you have a tracker mortgage, your monthly payment will usually go up soon after a rate rise. If you are on a standard variable rate, your lender will probably pass most of the rise on. If you have a fixed-rate mortgage, your payment stays the same until your fixed deal ends, but new deals are likely to be priced higher.
Sources
Reuters: Bank of England raises rates for first time since 2023, says more may come
MoneySavingExpert: Base rate rise
Kitco: Gold market holding solid gains even as BoE raises interest rates
Final Thoughts
The Bank of England has ended more than three years of waiting and raised rates to 4%. The vote, the warning from Clare Lombardelli, and the forecast of inflation near 5% all point the same way: the Bank thinks the inflation problem is back, and it is prepared to act again. For mortgage holders, the message is to check your deal and your budget now, before December 17. For savers, the message is to shop around, because a higher Bank Rate should mean better savings deals, even if banks are slow to pass it on.
