Bank of England raises interest rate to 4%, first rise in three years

The Bank of England has raised its base interest rate to 4%, its first increase in more than three years. The decision was announced on Thursday, 5 November 2026, by the Bank's monetary policy committee (MPC), which voted to lift the rate from 3.75%.

Eight of the nine MPC members backed the rise. The ninth member, Catherine Mann, wanted a bigger move of half a percentage point. The Bank also warned that another increase is on the way.

The rate rise is meant to tackle inflation, which has climbed sharply since the Iran war began. Higher energy costs linked to the conflict have pushed up prices across the economy. The decision came a week after the government's budget.

Why rates are rising

The Bank's move is a direct response to the energy shock. Rising fuel and power prices feed into the cost of almost everything, from food to transport, and push up the overall inflation rate. Central banks typically raise interest rates to make borrowing more expensive, which cools spending and helps bring prices under control.

The Iran war has continued to drive up energy prices, and the Bank has said it is acting to stop that cost rise from spreading further through the economy.

What it means for borrowers and savers

A higher base rate usually feeds through to mortgages, car loans and business borrowing, making them costlier for many households and firms. Savers may see higher returns on deposits over time. It is not yet known how quickly banks will pass on the increase to customers.

What comes next

The Bank has signalled that further increases are likely. It is not yet known how big any future rise would be or when it would come.