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The Bank of England’s Monetary Policy Committee raised Bank Rate by 0.25 percentage points to 4% on 4 November 2026, with eight members supporting that move and one voting for a larger increase. The Bank said UK inflation was 3.5% in September and could reach about 5% by the middle of 2027, as rising energy prices added pressure.
The Bank of England raised Bank Rate by 0.25 percentage points to 4% on 4 November, as the Monetary Policy Committee responded to higher energy prices and a worsening inflation outlook. The decision passed by an 8–1 majority; one member wanted a larger, half-point increase to 4.25%.
The Bank said UK consumer price inflation was 3.5% in September and was now expected to rise to around 5% by the middle of next year. It projected inflation would then fall as the direct impact of higher energy costs on annual inflation measures faded and restrictive monetary policy continued to weigh on price pressures. The Bank did not describe that path as certain.
The minutes identify the conflict in the Middle East, then in its ninth month, and rising global energy prices as central sources of uncertainty. Over the 15 UK working days to 27 October, front-month Brent crude futures averaged $108 a barrel, while UK front-month natural gas futures 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 direct energy costs were already feeding into household and business bills, but there was limited evidence so far of knock-on effects on other prices and wages. Some firms were absorbing higher costs through lower profit margins, while hedging and fixed-price contracts had delayed the impact for others. The minutes warn that those buffers may be temporary and that costs could pass through to consumer prices if the energy shock persists.
Higher Rates Aim to Contain Price Pressures
The increase raises borrowing costs for households and businesses, while offering savers higher returns where banks pass on the change. The Bank’s stated aim is to reduce the risk that an energy-price shock becomes persistent inflation across the wider economy. That matters because monetary policy cannot lower global oil or gas prices, but it can affect domestic demand, wage-setting and companies’ pricing decisions.
The decision also reflects a balance the MPC says it must manage: keeping inflation on course for the 2% target without adding unnecessary pressure to economic activity. The Committee said recent activity data had generally been stronger than expected, contributing to the case for a modest tightening. It also acknowledged that weaker activity and spare capacity remain part of the assessment.
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Energy Costs Reshape the Inflation Outlook
The September inflation rate of 3.5% included an estimated contribution of around one percentage point from direct energy effects, most of it from fuels, according to the minutes. The Bank expected those direct contributions to build over the next few quarters before easing, partly because of base effects and the downward-sloping wholesale energy futures assumptions used in its projections.
The outlook depends in part on how long high energy prices last and whether firms pass costs on to customers. The Bank said food inflation had remained lower than expected earlier in the year, with little sign yet of broad indirect price effects. It also described possible outcomes on both sides: sustained de-escalation in the Middle East could bring energy prices down, while continued conflict, wider regional escalation or further damage to refining capacity could keep them higher.
Energy Pass-Through Remains Uncertain
The timing and scale of any second-round effects are not yet clear. The minutes say some businesses have not faced the full rise in gas or electricity costs because of hedging or longer-term contracts, and some have so far absorbed costs by reducing margins. It remains uncertain how long those arrangements can cushion prices, or whether firms will later pass higher costs on to customers.
The future course of energy prices is also uncertain and depends on developments in the Middle East and global supply. The Bank’s inflation outlook uses futures-market assumptions, but the minutes describe risks that could take prices above or below those paths. The supplied summary does not give the full text of the minutes beyond the section on energy-cost pass-through, so it does not establish every member’s reasoning or the complete range of forecasts.
MPC Reviews Evidence in December
The Bank lists 17 December 2026 as the date when its next Bank Rate decision is due. Before then, the MPC says it will monitor underlying pay, firms’ pricing behaviour, spare capacity and the likelihood that elevated energy costs spread to other prices and the wider economy.
The November decision does not commit the Committee to another increase or to a later cut. The Bank says it will assess incoming evidence at each meeting and adjust rates as needed to return inflation to target in the medium term. Whether energy prices ease, and whether their effects broaden beyond direct household and business bills, will be central questions for the next decision.
Key Questions
What is the Bank of England’s new Bank Rate?
Bank Rate is 4% after the Monetary Policy Committee raised it by 0.25 percentage points at its meeting ending 4 November 2026.
How did the MPC vote?
The decision was approved by an 8–1 majority. One member voted to increase the rate by 0.5 percentage points, to 4.25%.
Why did the Bank raise rates?
The Bank cited rising global energy prices, inflation of 3.5% in September and a forecast that inflation could reach around 5% by the middle of 2027. It also said recent activity data had generally been stronger than expected.
When is the next Bank Rate decision?
The Bank’s published schedule gives 17 December 2026 as the date of the next decision.
Will Bank Rate rise again?
The November statement does not promise another increase. The MPC said policy is not on a pre-set path and that it will review inflation, pay, pricing behaviour and economic slack at each meeting.
Source: bankofengland.co.uk
