The Bank of England raised its key interest rate by 0.25 percentage points to 4% on November 5, its first increase since August 2023. The Monetary Policy Committee voted 8–1, with one member backing a larger rise to 4.25%. According to the Bank, with the conflict in the Middle East now in its ninth month and global energy prices increasing from an already high level, UK inflation reached 3.5% in September and is expected to rise to around 5% by the middle of 2027.
The Bank said there was still limited evidence of knock-on effects from energy on other prices and wages, but that the inflationary pressure building up was now enough to justify a rise. Andrew Bailey, the Governor of the Bank of England, said the increase should not be seen as the start of a long series of hikes, but that unless the Middle East conflict is resolved, it is unlikely to be the last, according to Reuters. With this decision, the Bank of England joins the US Federal Reserve, the European Central Bank and other central banks that have already raised rates in response to inflation linked to the war. The next Bank of England decision is due on December 17.
