Bank of England Raises Interest Rates for First Time in Three Years

2026, November 5

United Kingdom

The Bank of England increased its benchmark interest rate from 3.75% to 4%, marking its first rate increase since August 2023. The Monetary Policy Committee voted 8–1 in favour of the quarter-percentage-point increase, responding to persistent inflationary pressures largely driven by higher energy prices associated with the ongoing US–Iran conflict. British inflation reached 3.5% in September, significantly above the bank's 2% target.

Governor Andrew Bailey warned that another increase could be necessary if the Middle East conflict continues. The bank expects inflation to reach an average of 4.8% in the second quarter of 2027, potentially rising to 6.2% under a more severe energy-price scenario. The decision means further pressure on mortgage holders, businesses and households already struggling with higher living costs.