The Bank of England is widely expected to raise Bank Rate from 3.75% to 4% at 12:00 London today — the first hike since August 2023 — after September inflation climbed to 3.5% on higher petrol and diesel tied to the Iran conflict.
MoneyTurkey Economics Desk | 5 November 2026
Key points
- Economists expect a 25bp rise to 4%, the first Bank Rate increase since August 2023 and the first change since a cut last December.
- UK CPI rose to 3.5% in the year to September from 3.1% the month before, above the 2% target; UK Finance estimates £31 a month on a typical tracker mortgage.
Most analysts look for a quarter-point increase when the Monetary Policy Committee announces at 12:00 GMT. Inflation has climbed back above the Bank’s 2% target, driven mainly by higher energy and fuel prices linked to the Iran war, and peers in the US, Japan and the euro area have already tightened.
What happened
Bank Rate has been on hold since a cut last December, after falling from its 2023–24 peak of 5.25%. Reuters’ economist poll points to a 7–2 vote for 4%. Markets will parse any guidance on whether this is a one-and-done move or the start of a short hiking cycle.
At the September meeting the Committee voted 6–3 to hold. Governor Andrew Bailey has said firms appear to be absorbing higher costs more than in 2022, but the longer oil stays near $100 a barrel and gas prices stay elevated, the greater the risk of second-round effects.
What the numbers say
The Consumer Prices Index rose to 3.5% in the year to September 2026, up from 3.1% and well above the 2% target — and above the 3% the Bank had projected in its July forecasts. The jump is attributed mainly to higher energy and fuel prices.
A 0.25 percentage point rise would add £31 a month to a typical tracker mortgage, according to UK Finance. Variable-rate borrowers would see an average £14 increase once lenders adjust. Average two-year fixed mortgage rates stood at 5.96% as of 4 November, with five-year rates at 5.99%. About 510,000 tracker holders face the immediate payment step-up; new fixed deals already price in today’s expected move.
Why it matters
Higher Bank Rate lifts borrowing costs for households and firms and improves returns for savers. Chris Cheverall of CMC Markets said the focus is shifting from whether rates reach 4% to what happens next. The Bank must weigh still-high inflation against the growth outlook, while millions of domestic energy customers face a further price-cap adjustment in January.
MoneyTurkey’s read: the missed-local tape is the mortgage and energy pass-through — tracker pain and January bills — not just another G7 hike headline. Watch whether Bailey signals more hikes into 2027 as markets already price at least three further quarter-points next year.
What to watch
- MPC vote split and guidance after the expected move to 4%
- Same-day moves in new fixed-rate mortgage quotes
- January energy price-cap adjustment
- Next CPI release and growth data for second-round wage effects
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For information only. Not investment advice.
Sources
- BBC: bbc.co.uk
- Reuters: reuters.com
