Bank of England raises interest rates to 4% as inflation runs above target

The Bank of England raised its main interest rate by 0.25 percentage points to 4% on 5 November 2026, The Guardian reported. The rate, known as Bank Rate, is the benchmark the central bank sets, and it feeds into the cost of loans, mortgages and savings across the economy. Before the change it stood at 3.75%.

The decision was made by the Bank's Monetary Policy Committee, the group of policymakers that sets Bank Rate. At its meeting ending on 4 November, the committee voted by a majority of eight votes to one to raise the rate, according to the Bank of England's November report. Before the decision, Reuters reported that economists it polled expected a 7-2 vote in favour of a rise.

The move follows inflation that has been running above the Bank's target. Inflation is the rate at which prices rise, and the Bank aims to keep it at 2%. The main measure, the consumer prices index (CPI), reached 3.5% in September 2026. Reuters reported that the November increase would be the Bank's first rate rise since August 2023. Raising borrowing costs is a standard way for a central bank to weigh on prices, because it makes borrowing more expensive and spending slower.

The Bank also set out its outlook. It expects economic growth of 1.6% next year, and a rise in inflation to 4.9%. A separate forecaster, the Office for Budget Responsibility (OBR), expects the economy to grow by 1% in 2027 and CPI to peak at 3.75%. The two sets of forecasts differ on both growth and the peak in inflation.

Businesses are also under pressure. David Miles, the OBR's chief economist, said UK business profit margins, meaning the share of sales that firms keep as profit, had fallen from an average of 13% to 14% to between 10% and 11%.