United Kingdom: Bank of England lifts Bank Rate to 4% in first rise since August 2023

On 5 November 2026, the Bank of England raised Bank Rate by 0.25 percentage points, from 3.75 per cent to 4 per cent, the first rise in more than three years. The change reaches borrowers and savers across the United Kingdom through the rates banks go on to set.

What happened

Eight members of the Monetary Policy Committee voted for the quarter-point rise, and one, Catherine L Mann, voted for a bigger half-point rise to 4.25 per cent, the Bank recorded in its Monetary Policy Summary for November 2026. Bank Rate had sat at 3.75 per cent since December 2025, unchanged through six consecutive meetings, and the last rise was in August 2023.

September's inflation figures explain the timing. Consumer Prices Index inflation rose to 3.5 per cent in the 12 months to September, up from 3.1 per cent in August and well above the Bank's 2 per cent target.

Why the Bank moved

Energy prices are the driver. The conflict in the Middle East is in its ninth month, and global energy prices have kept rising from an already elevated level. Direct energy effects contributed around 1 percentage point to September inflation, mostly through fuels, the Bank says. Brent crude averaged $108 a barrel and UK front-month gas 216 pence a therm over the 15 working days to 27 October, 38 per cent and 81 per cent higher than when the Bank last published forecasts in July.

The Bank expects inflation to keep rising before it falls, to around 4.5 per cent in the first quarter of 2027 and around 5 per cent in the second quarter, then to ease as the energy effect fades. It judged that the inflationary pressure already in the pipeline was enough to warrant a rise, even though there is still limited evidence of higher energy costs feeding into other prices and wages. The measures in the Budget on 28 October are expected to trim 0.25 percentage points off inflation by the second quarter of 2027, and the Bank's forecasts already take them into account.

What it means in general terms

Bank Rate is the rate the Bank of England charges banks to borrow, and it feeds through to the rates banks charge and pay. A rise tends to push variable loan rates up when lenders pass it on, and deposit rates can also move up over time. Fixed-rate borrowers feel nothing until their fixed term ends. New fixed deals are priced off market expectations rather than Bank Rate itself, so a rise markets had already priced in does not automatically push new fixed rates up.

People on tracker mortgages see the change directly. Around 510,000 people hold tracker mortgages, and UK Finance puts the typical increase at about £31 a month, or about £15 a month per £100,000 of mortgage debt according to MoneySavingExpert. Two-year fixed mortgage rates had already risen by nearly 50 basis points since the start of September, the Bank's minutes record.

Savers may see deposit rates edge up, though each bank decides whether to pass a change on and from when. The best easy-access accounts already pay 4.5 per cent and above, with a benchmark rate of 4.57 per cent, according to MoneySavingExpert. The Autumn Budget a week earlier also raised tax on savings and property income from 6 April 2027, which affects what savers keep after tax, as covered in our Budget 2026 piece.

What happens next

The Bank's Market Participants Survey had put the median expected path at 4 per cent in November and 4.25 per cent in February, but the Bank says policy is not on a pre-set path and it will judge each meeting on the evidence. The next decision falls on 17 December 2026. The rates people actually pay and receive will be set by lender announcements in the days after the decision, so those announcements are the ones to watch.