Bank Rate rises to 4 percent as energy shock lifts inflation risks
An 8–1 vote at the Bank of England raised Bank Rate by 25 basis points to 4 percent. CPI inflation reached 3.5 percent in September 2026 and is projected to approach 5 percent in Q2 2027 as higher energy costs feed through.
Eight back a smaller increase
Andrew Bailey, Sarah Breeden, Swati Dhingra, Megan Greene, Clare Lombardelli, Huw Pill, Dave Ramsden and Alan Taylor supported the 25-basis-point increase.
Catherine L Mann sought 50 basis points to 4.25 percent, citing inflation persistence and policy credibility.
The Monetary Policy Committee judged that rising energy costs and stronger activity warranted tighter policy despite limited evidence of wage-price spillovers.
Over 15 UK working days ending October 27, Brent averaged $108 per barrel and gas 216 pence per therm, up 38 and 81 percent respectively from July Report levels.
Staff projected inflation near 4.5 percent in Q1 2027; Budget measures reduce projected Q2 inflation by 0.25 percentage points.
Further increases divide the majority
Bailey and Lombardelli saw a case for another increase absent weaker inflation pressures; Greene and Pill envisaged further tightening.
Taylor described an insurance increase, not the start of an unconditional tightening cycle.
Dhingra required evidence of stronger pricing and purchasing power to support keeping rates higher for longer.
Members noted that hedging and lower margins were cushioning firms, while weaker demand remained a risk.
Two-year mortgage rates had risen nearly 50 basis points since early September.
Insurance rather than a promise
The shared vote does not establish a shared rate path.
The Committee will monitor pay, pricing behaviour and spare capacity to judge whether energy costs are generating persistent inflation.
Its commitment remains returning inflation to the 2 percent target, not following a predetermined sequence of increases.