The Bank of England raised Bank Rate by 0.25 percentage points to 4% today at 12:00 UK time. The Monetary Policy Committee (MPC), which sets UK interest rates, voted 8-1 for the increase from 3.75%. Catherine Mann voted for a larger rise, of 0.5 points to 4.25%, and nobody voted to hold or cut. The Bank’s Market Participants Survey had a median of 4% for November.
What was announced
It is the first rise in Bank Rate in the past year. The rate had stood at 3.75% since December 2025, and the committee held it there on the 17th of September. Eight members, Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor, backed the quarter-point rise.
| Option | Members |
|---|---|
| Raise 0.25 points to 4% | 8 |
| Raise 0.5 points to 4.25% | 1 |
| Hold or cut | 0 |
The Bank pointed to inflation. UK CPI was 3.5% in September, and Bank staff project inflation of around 4½% in the first quarter of 2027 and around 5% in the second. The Bank links that to the Middle East conflict, now in its ninth month. Brent crude averaged $108 a barrel over 15 working days to the 27th of October, up 38% on the July Monetary Policy Report, and gas averaged 216p a therm, up 81%. The committee’s operative line was:
The degree of inflationary pressure in the pipeline is now sufficient to warrant an increase in Bank Rate.
Monetary Policy Committee
It added that “Monetary policy is not on a pre-set path.” The Bank said benchmark two-year mortgage rates have risen by nearly 50 basis points since the start of September.
Sterling on the day
The daily bar for GBP/USD shows an open of 1.3469, a high of 1.3506, a low of 1.3449 and a close of 1.3455, against a previous close of 1.34715. That is a fall of about 0.12% over the full session.
Bank Rate was 4% a year ago, 3.75% from December until yesterday, and is back to 4% today.
Why the committee is split on what comes next
The vote was close to unanimous on the move but not on the outlook. Alan Taylor, who voted for the quarter-point rise, framed his as insurance, a “one-for-now” hike, and said: “It is essential to communicate, and for markets to understand, that, as of now, this is not the start of a hiking cycle: policy isn’t on a pre-set, unconditional path.” He added: “The next move could be up, down, or sideways.”
Others lean the other way. Huw Pill said: “Nonetheless, of itself, a single 25-basis point hike is unlikely to be sufficient.” Megan Greene said: “Additional hikes will likely be required going forward, though further out this will depend on pay, pricing behaviour and slack.” Clare Lombardelli sees a case for a further near-term increase. Catherine Mann argued that a 50-basis point hike is “good policy”.
The split matters because the Bank is not signalling a path. Members who expect more rises sit beside one who says this is not the start of a hiking cycle.
What comes next
The next MPC decision is on the 17th of December. The Bank’s survey of market participants had a median of 4% for November and 4.25% for February, which is a survey expectation. Because members disagree on whether more hikes follow, that December meeting is a live decision, not a formality.
Andrew Bailey, the Governor, said of the conflict: “Put simply, it requires real progress towards settling the conflict in the Middle East.” The outlook is tied to that conflict and to the energy costs feeding the inflation projections.