--- title: Bank of England Raises Base Rate to 4%, Its First Rise Since 2023, and Warns More May Follow description: The Bank of England raised Bank Rate to 4% on 5th November 2026, voting 8-1. Inflation forecast, mortgage impact and the next decision on 17th December. author: Dr Marina Nani (Editor-in-Chief) date: 2026-11-06T09:30:00.032Z updated: 2026-11-06T09:30:00.039Z canonical: https://www.sovereignmagazine.com/article/bank-of-england-base-rate-4-percent-november-2026 image: https://cdn.nanimediahouse.com/pexels-29817303.webp categories: Economy, Finance content_type: News region: United Kingdom publication: Sovereign Magazine about: - type: Organization name: Bank of England description: The Bank of England is the central bank of the United Kingdom. Its Monetary Policy Committee sets Bank Rate, and it regulates banks and building societies through the Prudential Regulation Authority. url: https://www.bankofengland.co.uk sameAs: - https://en.wikipedia.org/wiki/Bank_of_England --- The Bank of England raised Bank Rate by a quarter of a percentage point to 4% on Thursday 5th November, its first increase in more than three years. Governor Andrew Bailey said the rise was unlikely to be the last unless the conflict in the Middle East is resolved. The Monetary Policy Committee voted 8 to 1. The one dissenter, Catherine Mann, voted for a half-point rise to 4.25%. Reuters noted that economists polled before the decision had expected any dissent to come from a member who preferred to hold rates. ## Why the Bank of England Raised Interest Rates Energy prices drove the decision. The conflict in the Middle East has disrupted the transport and supply of energy, pushing up motor fuel costs and household utility bills, the Bank said. Consumer price inflation reached 3.5% in September, against a target of 2%. The Bank found little evidence so far of faster price rises outside the sectors hit directly by energy costs, Reuters reported. It judged that the inflation pressure already building from months of high energy prices required a rise now, even though higher rates raise borrowing costs for businesses and many homeowners. Bailey said the rise 'should not be seen as the first in an inevitable long sequence' of increases. He called the fall in oil prices over the previous two days encouraging, a move Reuters linked largely to the US midterm election results, but said a significant amount of inflation pressure was already in the pipeline. Until Thursday, the Bank had held back while the US Federal Reserve and the European Central Bank raised their own rates in response to the energy shock. Sovereign set out [where each central bank stood going into this week's decisions](https://www.sovereignmagazine.com/article/interest-rate-decisions-this-week-boe-sweden-norway). ## Bank of England Inflation and Growth Forecasts The Bank now expects inflation to peak at an average of 4.8% in the second quarter of 2027, more than double its target. In a harsher scenario, with oil peaking at about $130 a barrel against roughly $100 today, inflation would reach 6.2% in the third quarter of 2027. Under its central forecast, inflation does not return to 2% until the third quarter of 2028, six months later than the Bank expected in July. Growth forecasts went up. The Bank now expects the economy to grow by 1.6% this year and 1.3% next year, stronger than the Office for Budget Responsibility predicted last week. It credited part of that strength to spending on artificial intelligence and part to a small, temporary boost from Chancellor John Healey's budget. Even so, the Bank expects household income from work, after inflation and taxes, to fall this year and next. ## How the Monetary Policy Committee Is Split on Further Rises The committee agreed on Thursday's rise but disagreed on what comes next, according to the minutes. Deputy Governor Clare Lombardelli said a further rise was likely to be needed in the near term. Megan Greene and Chief Economist Huw Pill spoke of further tightening and additional rises. Swati Dhingra and Alan Taylor said they would need stronger evidence that higher energy costs are feeding into wider prices and pay before backing more increases. Financial markets had priced in three more quarter-point rises during 2027, more than most economists expect. Bailey said the gap reflects markets pricing the risk of a sharp further jump in energy prices, while economists forecast the single most likely path. Sterling strengthened against the dollar after the announcement, and two-year government bond yields rose by 5 basis points. ## What the Base Rate Rise Means for Your Mortgage and Savings If you have a tracker mortgage, your rate follows Bank Rate directly, so your monthly payments rise once your lender applies the change. If you are on your lender's standard variable rate, the rise reaches you only if and when your lender passes it on. If you have a fixed-rate deal, your payments stay the same until the deal ends, but the rate you are offered when you remortgage depends on where markets expect Bank Rate to go, not only on where it stands today. If you save, banks and building societies often raise savings rates after a rise in Bank Rate, but they are not obliged to, and many easy-access accounts move slowly. It pays to compare what your current account offers against the best rates available. Sovereign explained [what the rise means for fixed and tracker mortgages](https://www.sovereignmagazine.com/article/bank-of-england-rate-rise-november-2026-mortgage) ahead of the decision. The next decision is due on Thursday 17th December. ## FAQ **Q: Have interest rates gone up in the UK?** Yes. The Bank of England raised Bank Rate from 3.75% to 4% on 5th November 2026, its first increase since 2023. Bank Rate is the rate the Bank pays on money that commercial banks hold with it, and it influences the rates banks charge on mortgages and loans and pay on savings. **Q: Will UK interest rates go up again?** Nobody can be sure, and the answer depends on inflation. In November 2026 several members of the Bank of England's Monetary Policy Committee said further rises were likely if energy prices keep pushing inflation up, while others wanted more evidence first. Financial markets at that point expected further rises in 2027. The committee meets eight times a year, and the next decision is due on 17th December 2026. **Q: Will interest rates go down in 2027?** Few forecasters expected cuts in 2027 as of November 2026. The Bank of England forecast that inflation would peak at about 4.8% in the second quarter of 2027 and not return to its 2% target until the third quarter of 2028, and financial markets were pricing further rises rather than cuts for 2027. Rates could still fall sooner if energy prices drop sharply and inflation eases faster than expected.