Bank of England Raises Rates to 4% in 2026: First Hike in Three Years

In this article

• What happened today, and when
• Why a hike happened now
• What the vote was
• What it means for households and businesses
• What comes next
• What I am watching next
• Frequently asked questions

The Bank of England has raised interest rates for the first time in three years. The Monetary Policy Committee voted 8–1 on Thursday, 5 November 2026 to lift Bank Rate by 0.25 percentage points to 4% from 3.75%. Catherine L Mann was the only dissenter, preferring a bigger 0.5-point rise to 4.25%. The Bank said the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase, with UK inflation at 3.5% in September and now expected to rise to around 5% by the middle of next year. In this article, I explain the vote, the inflation data, and what the rise means for your money.

What happened today

The Bank of England raised Bank Rate by 25 basis points to 4%. The announcement came at 12:00 GMT on 5 November 2026, which is 07:00 ET. The Bank had held rates at six consecutive meetings before this November change. The last rise came in August 2023, when inflation was over 6%.

Why a hike happened now

Inflation is the main reason. UK Consumer Prices Index inflation reached 3.5% in the year to September 2026, up from 3.1% in August. That was more than economists had expected. It sits well above the Bank’s 2% target, and above the 3% the Bank had predicted in late July. Fuel costs helped push inflation higher, and energy costs also played a part. The Reuters report links the pressure to the US-Iran war.

The Bank said the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase. The Middle East conflict is now in its ninth month, global energy prices are still rising, and activity data has come in stronger than expected.

The Bank uses interest rates to cool demand and to slow price rises. A higher rate makes borrowing dearer, and it also rewards saving more. Businesses are predicting annual wage settlements of around 3.5% for next year, similar to 2026. So far there have been few signs of significant “second-round” effects of inflation on wage deals. Recent talk from committee members has been hawkish.

What the vote was

The Monetary Policy Committee voted 8–1 to raise Bank Rate to 4% from 3.75%. Eight members — Bailey, Breeden, Dhingra, Greene, Lombardelli, Pill, Ramsden and Taylor — voted for the 0.25-point rise. Catherine L Mann was the only dissenter, preferring a bigger 0.5-point rise to 4.25%.

The Bank held rates at 3.75% in September in a 6-3 vote, with three members favouring a hike. Since then, inflation has risen to 3.5%.

What it means for households and businesses

Millions of households and businesses across the United Kingdom now face higher borrowing costs. Banks often pass rate moves on to loans and mortgages. A rise to 4% makes new borrowing dearer than it was at 3.75%, and it also raises costs for some borrowers on variable rates.

Mortgage costs are the clearest example for many families. A higher Bank Rate can push mortgage rates up over time, and that can raise monthly payments for new buyers and for people who remortgage. We have seen similar pressure in the United States, where mortgage rates have stayed high. You can read our earlier look at US mortgage rates at 7.40% in October 2026 for that wider picture. Savers could see a small gain, as banks may raise savings rates after a Bank Rate rise. You can compare the wider savings picture in our guide to high-yield savings accounts and rates in 2026. I am not giving personal financial advice here. Higher rates also raise the cost of loans for firms. Banks watch rate moves closely, as you can see in our preview of bank earnings in Q3 2026, with JPMorgan and Goldman expectations.

What comes next

The story may not end with one rise. Many economists see one more hike, to 4.25%, early next year. That is an expectation, not a promise, and it is less than markets price. Goldman Sachs expects the committee to be ready to respond but to give no strong steer. New forecasts show inflation rising to around 5% by the middle of next year — about 4.5% in the first quarter of 2027 and around 5% in the second quarter. The Bank said policy is not on a pre-set path and it will adjust rates as needed to return inflation to the 2% target. The next meeting is on 17 December 2026. The Federal Reserve has faced its own rate and inflation questions this year. You can read our report on the Fed rate decision in October 2026 and CPI inflation for that US angle.

What I am watching next

The decision, the vote and the forecasts are now known. I am watching three things from here. First, how the Bank talks about the next move — the statement gives no strong steer, and policy is not on a pre-set path. Second, whether inflation follows the new forecast and rises toward 5% by the middle of next year. Third, what the December meeting brings on 17 December 2026. You can read the IMF global growth forecast for 2026 and inflation and the IMF warning on high debt and fiscal strains for governments for that wider context.

Frequently asked questions

What did the Bank of England do on 5 November 2026?
It raised Bank Rate by 25 basis points to 4% from 3.75%. The decision was announced at 12:00 GMT.

What time was the announcement?
The announcement was at 12:00 GMT on Thursday, 5 November 2026. That is 07:00 ET.

What was the vote?
The Monetary Policy Committee voted 8–1 in favour of the rise. Catherine L Mann was the only dissenter, preferring a 0.5-point rise to 4.25%.

Why did the Bank raise rates now?
UK CPI inflation rose to 3.5% in September, up from 3.1% in August, well above the Bank’s 2% target. Fuel costs helped drive the rise.

What was the decision at the last meeting?
The Bank held rates at 3.75% in September in a 6-3 vote. Three members favoured a hike at that meeting.

What could happen next?
Many economists see one more hike, to 4.25%, early next year. New forecasts show inflation rising to around 5% by the middle of next year. The next meeting is on 17 December 2026. Both are expectations, not confirmed facts.

Final thoughts

I feel the weight of this decision for ordinary people. A rate rise is not just a number on a screen. It can change a monthly mortgage bill, what a small firm pays on a loan, and what a saver earns on cash set aside for a hard month. I know many readers will read the noon news with a knot in their stomach. I want the facts first, clear and honest, with no hype. The Bank has now spoken. The decision is a rise to 4%, the vote was 8–1, and the new forecasts point to inflation near 5% by the middle of next year. I have checked each fact against the Bank’s own announcement, and I will keep following what the rise means for your money, in plain words.