{"id":128249,"date":"2026-11-05T11:00:00","date_gmt":"2026-11-05T11:00:00","guid":{"rendered":"https:\/\/en.econostrum.info\/uk\/?p=128249"},"modified":"2026-11-05T10:11:44","modified_gmt":"2026-11-05T10:11:44","slug":"bank-of-england-poised-raise-interest-rates","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/uk\/bank-of-england-poised-raise-interest-rates\/","title":{"rendered":"Bank of England Poised To Raise Interest Rates to 4% As Inflation Takes a Worrying Turn"},"content":{"rendered":"\n

The Bank of England <\/strong>is expected to raise interest rates from 3.75% to 4% on Thursday, marking its first increase in borrowing costs since August 2023. The anticipated decision follows a rise in UK inflation, driven largely by higher fuel and energy prices linked to the conflict in the Middle East.<\/p>\n\n\n\n

The announcement, scheduled for 12:00 GMT, comes after six consecutive meetings at which the Bank’s Monetary Policy Committee (MPC<\/strong>) kept rates unchanged. Economists widely expect a quarter-point increase, with attention also turning to what policymakers might signal about future decisions as households and businesses face higher borrowing costs.<\/p>\n\n\n\n

Rising Energy Prices Put Pressure on the Bank of England<\/strong><\/h2>\n\n\n\n

UK inflation reached 3.5% in September 2026, up from 3.1% in August and above the Bank of England’s 2% target. According to The Independent<\/a>, the September figure was the highest recorded in 11 months<\/strong>, adding pressure on policymakers to respond.<\/p>\n\n\n\n

Higher petrol and diesel prices have been a major contributor to the increase. The conflict involving Iran has also pushed up energy costs, with the effects feeding into prices across the UK economy.<\/p>\n\n\n\n

Households face further pressure from domestic energy bills. Ofgem’s energy price cap increased by 3.6%<\/strong> for a typical household on 1 October, while a further 22% increase is forecast for January.<\/p>\n\n\n\n

Ellie Henderson<\/strong>, an analyst at Investec, warned that sustained increases in energy costs could have wider consequences for inflation. \u201cThe longer energy prices remain elevated, the greater the risk that a temporary price shock becomes more permanent<\/em>,\u201d she said, suggesting that an interest rate increase could help manage that risk.<\/p>\n\n\n\n

The Bank must also consider the wider economy. UK unemployment <\/a>fell to 4.7% in the three months to August, its lowest level in more than a year, while economic output unexpectedly increased by 0.1% in August.<\/p>\n\n\n\n

According to The Guardian<\/a>‘s live business coverage on Thursday morning, financial markets were pricing in a 98% probability of an interest rate increase. Economists nevertheless differed over how committee members would vote, with forecasts ranging from a 6-3 split to an 8-1 majority.<\/p>\n\n\n\n

\n

Chart of the Day \ud83e\udd13

If (surely when) the Bank of England raises interest rates at noon today, beware any lazy headlines about 'mortgage misery for millions'…

The vast majority of residential mortgages – nearly 9 in 10 – are now on fixed-rate deals. The costs of these depend\u2026 pic.twitter.com\/24yyk3TYYu<\/a><\/p>— Julian Jessop (@julianHjessop) November 5, 2026<\/a><\/blockquote>