Bank of England raises Bank Rate to 4%

The Bank of England raised its Bank Rate to 4% from 3.75% on November 5, its first increase in more than three years, as policymakers responded to energy-related inflation risks. The Monetary Policy Committee voted 8-1 for the quarter-point rise. Catherine Mann preferred a half-point increase, to 4.25%. The Bank had held rates steady for six consecutive meetings. The Bank said higher energy costs could continue to feed into prices if the shock persists. Inflation was 3.5% in September, above the Bank’s 2% target. Its central forecast puts inflation at an average 4.8% in the second quarter of 2027, before returning to 2% in the third quarter of 2028. That return is six months later than projected in July. Governor Andrew Bailey said further rate increases were possible if the conflict in the Middle East remained unresolved, but that the November decision did not begin an inevitable sequence of hikes. The committee will assess the outlook at each meeting. Its members differed over the scale of further tightening: Mann voted for a larger increase, while other policymakers said more evidence of persistent inflation would be needed before supporting additional action. In a more...