Bank of England Raises Bank Rate to 4%, First Hike Since 2023, Warns Inflation Near 5%

The Bank of England raised Bank Rate by 25 basis points to 4% on 5 November 2026, its first increase since August 2023, and warned that inflation will rise further as energy costs linked to the Iran war feed through. CNBC summarised the decision on X: "Bank of England hikes interest rate for the first time since Iran war, warns inflation will near 5%."

The Guardian reported that eight members of the Monetary Policy Committee voted for the move from 3.75% to 4%, while Catherine Mann preferred a half-point increase. The Bank's own interest-rate decision page records the latest Bank Rate setting. CNBC's fuller market story is at cnbc.com.

Why the committee hiked

The Guardian links the decision to Middle East conflict that has kept oil prices persistently above $100 a barrel in recent months as hopes faded of a deal that could reopen the Strait of Hormuz. Before the Iran war, the nine-member committee had been expected to cut rates this year, the paper notes.

Consumer-price inflation hit 3.5% in September, according to The Guardian. The Bank now expects UK inflation to rise to 4.9% in the middle of next year, up from 3.2% in its July forecast, the paper reports. CNBC's shorthand on X described inflation nearing 5%; The Guardian's more precise Bank figure is 4.9% for mid-2027. Both descriptions point to the same upward revision rather than two separate forecasts.

The MPC also expects real post-tax income to fall this year and next, The Guardian says, echoing gloomy living-standards forecasts from the Office for Budget Responsibility discussed in the same piece. The rate rise will hit mortgage borrowers and arrives a week after the budget promised "breathing space" for households, per that report.

Bailey on what comes next

Governor Andrew Bailey raised the prospect of another increase if inflation risks do not soften. The Guardian quotes him from the MPC minutes: "Without news which softens the risks to inflationary pressures, I can see the argument for a further increase in rates and thereafter taking a more conditional approach."

He also played down the idea of a long, automatic hiking cycle. "Today's increase shouldn't be seen as the first in an inevitable long sequence in hikes. But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase," Bailey said, according to The Guardian. The Bank's next scheduled decision is 17 December.

Oil prices had fallen sharply to below $100 a barrel after US midterm results that some investors read as constraining Donald Trump's options, The Guardian adds—an oil move that does not by itself reverse the Bank's mid-2027 inflation path described above.

What to take from the vote

The 8–1 split shows a clear majority for 25 basis points, with Mann alone preferring 50. That is a hawkish dissent on size, not a vote against tightening. Markets and households should treat the mid-2027 inflation path—about 5% in CNBC's phrasing, 4.9% in The Guardian's Bank figure—as a conditional forecast tied to energy costs and the Iran conflict, not as a guaranteed outcome.

For borrowers, the settled fact today is simpler: Bank Rate is 4%, up from 3.75%, for the first time in more than three years.