UK Interest Rate rises to 4.00% for the first time in three years
We give our thoughts on today’s decision to raise UK interest rates exclusively to our website.
5 Nov 2026
The Bank of England Monetary Policy Committee at 12:00 today voted for the first time in three years to raise the UK Base Rate from 3.75% to 4.00%, a move widely expected. All nine MPC members voted for the rise (one for a 4.25% rate!), two had been expected to vote for a hold.
Governor Andrew Bailey made it clear this move was a response to current and projected inflation. The current annual inflation rate is 3.5%, but could rise to 5% if the Iran conflict continues, and if this is the case, another rate rise is a possibility. He said “the longer the resolution to the conflict, the more inflationary pressure builds up in the pipeline.”
Mr Bailey also addressed the events of “the last 48 hours” (the US election), which has seen the oil price fall by about 15%. In response to journalists questions, he would not commit to varying the outlook, citing that pressures are already in the system. Oil is of course still nearly 40% higher than before the start of the war.
The pound, which had been falling all morning shot up 0.25%, still below today’s open, and then faded back. UK Bonds made a tiny move down, and similarly reversed. FTSE 100 spiked down 0.23%, but within the hour had fully recovered. Of course this is after substantial moves related to events in the US.
There is more information on the BBC Website whose chart we have used.
Our View
As we said in September, we were ‘fortunate’ to get a rate hold then, when inflation was 3.1%. It is now 3.5% so a rate rise was inevitable. This is not good but could have been worse. As we also said in September, we can only hope the Iran situation is resolved. The oil market place reaction to the Democrat party landslide in the US adds to that hope.
The next inflation report is on November 18th and the next rate decision is on December 17th.
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