TL;DR
Get your next haul delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
The Bank of England raised its base rate by 0.25 percentage points, from 3.75% to 4%, on an eight-to-one Monetary Policy Committee vote. Governor Andrew Bailey said higher energy prices are adding to inflation pressures, but warned the decision does not signal an inevitable sequence of further hikes. The Bank forecasts inflation could reach 5% by mid-2027.
The Bank of England raised its base rate from 3.75% to 4% on November 5, as its Monetary Policy Committee (MPC) responded to rising inflation and higher energy prices. The decision passed by eight votes to one; one member backed a larger half-percentage-point increase. The move affects borrowing costs across the UK, including the rates lenders offer on mortgages and other loans.
The committee increased the rate by 0.25 percentage points. In the published vote, eight members supported that increase and one voted for a 0.5 percentage-point rise. No member voted to hold the rate, according to the decision details in MoneyWeek’s live report. The report said the base rate had last changed in December 2025, when it was cut from 4% to 3.75%.
Governor Andrew Bailey said rising energy prices had created enough inflationary pressure to warrant an increase. The Bank’s stated concern follows an increase in annual Consumer Prices Index inflation to 3.5% in September 2026, from 3.1% in August and 2.9% in July, according to figures attributed to the Office for National Statistics in the report.
The Bank forecasts that CPI inflation could rise to 5% by mid-2027, with higher energy prices expected to be the main driver. That is a forecast, not a confirmed future outcome. The accompanying Monetary Policy Committee report is intended to explain the Bank’s projections for inflation and economic growth and how it assesses the risks ahead.
How the Rate Rise Affects Borrowers
The increase raises the Bank’s benchmark rate at a time when mortgage costs have already moved higher. Moneyfacts data cited by MoneyWeek put the average new mortgage rate at 5.89%, up from 5.83% at the start of October. The report said the average two-year fixed mortgage rate had risen from 4.94% in November 2025 to 5.97% in November 2026, while the average five-year fixed rate increased from 5.01% to 6% over the same period.
Those mortgage figures reflect lender pricing and market conditions, not a one-for-one change in every borrower’s payments after the Bank’s decision. People with variable-rate borrowing may be more directly affected when lenders adjust rates, while fixed-rate customers generally face changes when they take out or renew a deal. The source report said lenders had already been pricing in an expected increase, so the immediate effect on available offers may depend on how financial markets and banks respond.
The broader policy challenge is to bring inflation back toward the Bank’s 2% target without unnecessarily weakening economic activity. Higher interest rates can dampen spending and borrowing, but can also make debt more expensive for households and businesses. The decision therefore matters both to people facing loan costs and to the wider economic outlook.
Products Worth Considering
TCL 43-Inch 4K UHD Smart LED Roku TV (43S435, 2021 Model)
Philips Hue Festavia 130-Foot Indoor/Outdoor Smart String Lights, 500 Mini Color-Changing LEDs
Philips Hue Smart Light Starter Kit with Bridge and 4 White and Color A19 Bulbs
As an affiliate, we earn on qualifying purchases.
From Rate-Cut Expectations to a Hike
Expectations at the start of 2026 had been for the base rate to fall gradually during the year, according to MoneyWeek’s report. That outlook changed after conflict in the Middle East began at the end of February. The report linked the conflict and subsequent rise in energy costs to increased concern about inflation, while noting the Bank had held rates before today’s decision.
The report put crude oil at about $96 a barrel on November 5, compared with around $70 before the conflict. It also cited UK GDP growth of 0.5% between April and June 2026, following 0.6% growth in the first quarter. Those figures form part of the economic picture described ahead of the decision; they do not, by themselves, establish why each committee member voted as they did.
Before the announcement, economists at Pantheon Macroeconomics and Oxford Economics had forecast a quarter-point increase. Pantheon’s Robert Wood expected an eight-to-one vote, while Oxford Economics’ Alexander Harvey forecast a further quarter-point increase in February 2027. These were pre-decision forecasts, not Bank commitments. The MPC makes rate decisions eight times a year, and the Bank issues a fuller report with projections at four of those meetings.
“Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes.”
— Andrew Bailey, governor of the Bank of England
Further Rate Moves Remain Uncertain
The decision confirms a rate increase today, but it does not establish the timing or size of any future moves. Bailey said the increase should not be interpreted as the beginning of an inevitable run of hikes, while also saying another increase appeared possible if the Middle East conflict continued. The committee says it will assess conditions at each meeting.
The Bank’s projection that inflation may reach 5% by mid-2027 is a forecast, and its path will depend on factors including energy prices. The source report does not provide the full detail of the Bank’s growth projections or the individual member’s reasoning for supporting a larger increase. It is also unclear how lenders will adjust mortgage offers after the announcement, given that some had already priced in an expected rise.
The Bank’s Next Policy Review
The next important step is publication and scrutiny of the Bank’s accompanying economic report, including its inflation and growth projections. Those forecasts will provide more detail on how the MPC assessed energy prices, the conflict and risks to the UK economy. The committee is scheduled to make rate decisions eight times a year; it will review the outlook again at its next meeting rather than committing now to a particular path.
Borrowers and savers will also be watching how banks and building societies respond. Mortgage rates may change as lenders reassess funding costs and market expectations, but the information available in the live report does not establish what individual providers will do next. Further inflation data, energy-market developments and economic figures will help shape expectations for the Bank’s next decision.
Key Questions
What rate did the Bank of England set?
The Bank raised its base rate by 0.25 percentage points, to 4%, on November 5, 2026.
How did the MPC vote?
The vote was eight to one. Eight members supported the quarter-point increase, while one voted for a larger, half-percentage-point rise.
Why did the Bank raise interest rates?
Governor Andrew Bailey said rising energy prices had created enough inflationary pressure to justify the increase. Annual CPI inflation was 3.5% in September 2026, and the Bank forecasts it could reach 5% by mid-2027.
Will the Bank raise rates again?
That is not confirmed. Bailey said the increase was not the start of an inevitable long sequence, but that another rise appeared possible if the Middle East conflict continued. The MPC says it will decide at each meeting based on its assessment of the outlook.
Will the rate rise change my mortgage payment?
It depends on your mortgage and lender. Some variable-rate borrowers may see payments change if their lender adjusts rates; fixed-rate borrowers are generally affected when taking out or renewing a deal. The live report does not specify how individual lenders will respond.
Source: moneyweek.com
