Bank of England raises Bank Rate to 4% in November as energy pressures build

The Bank of England raised Bank Rate by 25 basis points to 4% from 3.75%, ending a run of unchanged decisions since December 2025. Published on 5 November 2026, the decision followed the Monetary Policy Committee’s meeting ending on 4 November. The MPC backed the increase by 8–1; the remaining member preferred a larger rise to 4.25%.

The increase reverses the direction of the earlier easing recorded between December 2024, when Bank Rate stood at 4.75%, and December 2025. It returns the rate to its November 2025 level. That comparison puts the latest tightening in perspective: borrowing conditions are being tightened again, but the policy rate remains below its level at the start of that period.

Energy pressures outweigh limited evidence of spillovers

The MPC said global energy prices had continued rising from already elevated levels as the Middle East conflict entered its ninth month. It reported that UK CPI inflation had increased to 3.5% in September and expected it to reach around 5% by the middle of 2027. The Committee projected inflation would subsequently decline as energy-price effects faded from annual comparisons and restrictive monetary policy weighed on inflation.

The distinction between direct energy costs and broader inflation was central to the assessment. The MPC said evidence of knock-on effects on other prices and wages remained limited. Nevertheless, it judged inflationary pressure in the pipeline sufficient to warrant an increase, while stronger-than-expected recent activity added to the case for modestly tighter policy.

The decision represents additional restraint on demand rather than a direct remedy for higher energy costs. If the increase passes through to household and business borrowing rates, it could curb interest-sensitive spending and make investment less attractive. That would help limit the scope for energy-driven price rises to spread, although the strength of transmission depends on financing conditions and borrowers’ exposure.

The MPC said policy was not on a pre-set path. Its emphasis on underlying pay, pricing behaviour and economic slack makes the breadth of inflation pressure—not simply the direct energy shock—the key issue for subsequent decisions aimed at returning inflation to the 2% medium-term target.