Bank of England Raises Rates to 4% in First Hike Since 2023, Warns Inflation Could Near 5%

Published November 5, 2026, 5:15 PM PKT. Based on the Bank of England's Monetary Policy Summary and Minutes and Monetary Policy Report published November 5, 2026 (primary sources), with additional reporting by Reuters and market data from CoinGecko (secondary sources).

The Bank of England raised its benchmark interest rate to 4% on Thursday, November 5, 2026, its first rate increase in more than three years, as policymakers moved to contain inflation that is now expected to climb to almost 5% by the middle of next year. The Monetary Policy Committee voted 8-1 to lift Bank Rate by 0.25 percentage points from 3.75%, with the change taking effect on November 6, 2026. The decision, announced at midday in London, ends a run of six consecutive meetings in which the Bank held rates steady, and it follows a year in which markets had expected cuts, not hikes, before energy prices surged after the US-Israel strikes on Iran in February.

The 8-1 vote, and the one member who wanted more

The vote was not close, but the disagreement was about how far to go, not whether to move. Eight members, including Governor Andrew Bailey, voted for the quarter-point rise to 4%. Catherine L Mann was the sole dissenter, and she voted for a larger increase of 0.5 percentage points, to 4.25%, because she judged that the projected rise in inflation to 4.9% by mid-2027, and the risk that higher prices feed into wages and price-setting, warranted a bigger step. No member voted to hold rates unchanged. The split was more hawkish than the Reuters poll of economists, which had expected a 7-2 vote with two members voting to hold. At the September meeting the committee had voted 6-3 to hold, with Mann and two others already favouring a rise.

Inflation is forecast to reach almost 5% by mid-2027

The case for the hike rests on the Bank's new forecasts. Consumer price inflation stood at 3.5% in the year to September 2026, up from 3.1% in August and well above the Bank's 2% target, according to the Office for National Statistics. The Bank's central projection now has inflation rising to around 4.5% in the first quarter of 2027 and averaging 4.9% in the second quarter, before falling back to the 2% target in the third quarter of 2028. Its table of projections puts four-quarter inflation at 3.8% in the final quarter of 2026, 4.0% in the final quarter of 2027 and 2.0% in the final quarter of 2028. Food price inflation is projected to reach around 4.75% by mid-2027 and core goods inflation to rise above 2.5% in the second quarter of 2027. The Bank said measures in the government's Budget 2026 are expected to reduce inflation by about 0.25 percentage points in the second quarter of 2027, with the effect unwinding the following year. In a worse-case scenario, inflation would reach 5.5% in the final quarter of 2027, while a weaker-demand scenario would leave it at 3.6%.

No pre-set path, but several members signal more hikes

The Bank was careful not to promise a run of further increases. Its summary states that monetary policy is not on a pre-set path, and that the committee will adjust Bank Rate as necessary to bring inflation back to the 2% target in the medium term. The minutes, however, show several members leaning toward more tightening. Megan Greene said additional hikes will likely be required going forward. Huw Pill said a single 25 basis point hike is unlikely to be sufficient and that more policy tightening is likely to be required, including in the near term. Clare Lombardelli said that, in the absence of evidence of weaker inflation pressures, there is likely to be a case for a further increase in rates in the near term. Bailey said that without news which softens the risks, he can see the argument for a further increase in rates and thereafter taking a more conditional approach. Alan Taylor pushed back on that framing, saying this is not the start of a hiking cycle and calling the move a one-for-now insurance hike, with the next move possibly up, down or sideways. Swati Dhingra said the committee would need evidence to support keeping Bank Rate at a higher level for an extended period. Market pricing points the same way as the hawks: the market curve for overnight rates rises to around 4.9% by the end of 2027, and the median respondent to the Bank's market survey expected Bank Rate to rise to 4.25% in February.

What it means for crypto markets

The Bank of England is not moving alone. The US Federal Reserve raised its target range to 3.75% to 4% in September, its first hike in three years, and held rates there on October 28 in a 10-2 vote, with markets pricing a high chance of another hike in December. The European Central Bank raised its main rate to 2.5% in September. For crypto, the turn toward tighter money in the world's major economies raises the cost of holding assets that pay no yield, and it has coincided with a sharp selloff: Bitcoin ($BTC) traded near $80,133 at about 12:08 UTC on November 5, down 3.7% in 24 hours and down 25.7% over seven days, according to CoinGecko, with 24-hour trading volume of about $79.2 billion. Sterling, by contrast, strengthened into the decision, touching a seven-week high of $1.3503 in Asian trading before settling near $1.346, according to Reuters. The Bank's next decision is on December 17, 2026, and Governor Bailey holds a press conference at 12:30 GMT on Thursday to explain the committee's thinking, so the market's reading of how far this tightening cycle goes will keep moving after the headline.

Sources

• Bank of England, Bank rate increased to 4% - November 2026 Monetary Policy Summary and Minutes, November 5, 2026 (primary source: 8-1 vote to raise Bank Rate by 0.25 percentage points to 4%, effective November 6, 2026; Catherine L Mann dissent for a 0.5 point rise to 4.25%; inflation projection of around 4.5% in 2027 Q1 and 4.9% in 2027 Q2, returning to 2% in 2028 Q3; no pre-set path; individual members' views on further hikes)
• Bank of England, Monetary Policy Report - November 2026, November 5, 2026 (primary source: Table 3.B central projection for CPI inflation, 2026 Q4 3.8%, 2027 Q4 4.0%, 2028 Q4 2.0%, 2029 Q4 1.8%; adverse-inflation scenario 5.5% in 2027 Q4; weaker-demand scenario 3.6%; food inflation around 4.75% by mid-2027; Budget 2026 measures reducing CPI by about 0.25 percentage points in 2027 Q2; market OIS curve rising to around 4.9% at end-2027)
• Reuters, Bank of England poised to hike rates for first time in 3 years, November 4, 2026 (secondary reporting: Reuters poll expected a 7-2 vote to raise Bank Rate to 4% from 3.75%; first increase since August 2023; inflation pressures from the US-Iran war; September 6-3 vote to hold)
• CoinGecko, Bitcoin price page, observed about 12:08 UTC, November 5, 2026 (secondary source: Bitcoin ($BTC) $80,133.16, down 3.7% in 24 hours and down 25.7% over seven days; market capitalisation about $1.6 trillion; 24-hour trading volume about $79.2 billion)

This article is news reporting and is not investment advice.